Bitcoin Outperformance during the Iran conflict doesn’t fit the standard playbook, and Bitwise CIO Matt Hougan thinks he knows why.
The largest cryptocurrency has gained 12% since the US and Israeli airstrikes began on February 28, while the S&P 500 has fallen 1% and gold has fallen 10%. For an asset that is routinely dismissed as a leveraged tech bet during bouts of risk aversion, that performance has forced a rethink.
In a post on X, Hougan reframed bitcoin as two simultaneous bets. The first is the well-known “digital gold” thesis, which competes for a share of the $38 trillion value reserve market.
The second is what he calls an out-of-the-money call option on bitcoin that functions like a real currency, a bet he says most investors have treated as almost irrelevant until now.
The conflict with Iran changed the calculations of the second bet. Iran said it will charge a toll of $1 per barrel in bitcoins to ships passing through the Strait of Hormuz, the equivalent of about $20 million a day.
The tax is one of the first real-world examples of a sovereign state using bitcoin as a settlement mechanism for physical trade, even if circumstances were far from ideal.
“In a world where countries have weaponized their financial avenues, bitcoin is emerging as an apolitical alternative,” Hougan wrote, harking back to the shift when the United States kicked Russia out of the SWIFT network in 2022, a move that France’s finance minister called a financial “nuclear bomb” at the time.
The options framework is what makes the argument worth watching.
Options gain value when the probability of reaching the strike price improves or the volatility of the underlying asset increases. Hougan argues that the conflict with Iran did both simultaneously, increasing the likelihood that bitcoin will be used as a currency and at the same time increasing the volatility of the global monetary order.
If their framework is valid, it implies that bitcoin should rally during future geopolitical conflicts, particularly those involving countries caught between the US and Chinese financial systems, and that the total addressable market for bitcoin is significantly larger than the gold market alone.
The counterpoint is that Iran’s use of bitcoin occurs as a sanctioned state acting out of necessity, not preference. It says more about the limits of the application of dollar-denominated rules than about bitcoin’s willingness to function as a neutral settlement layer. The infrastructure for this, stablecoin settlement, cross-border payment pathways and the adoption of sovereign wallets, remains at best in an early stage.
But Hougan’s central observation remains. The market is valuing Bitcoin differently during this conflict than during any previous geopolitical shock, and the “digital gold” thesis alone doesn’t explain why.
