Why Can Bitcoin Rise Against the Tide of Turmoil?
Original Article Title: Chaos Is a Ladder: Why Bitcoin Rallies During Geopolitical Uncertainty
Original Article Author: @Matt_Hougan
Translation: Peggy, BlockBeats
Editor's Note: While the market usually categorizes Bitcoin as a "risky asset," this round of price action triggered by the Iran conflict has given a clear signal deviating from the consensus: amidst a decline in traditional assets and the failure of safe-haven assets, Bitcoin has instead shown strength.
The author of this article, Matt Hougan (current Bitwise CIO, Future Proof co-founder, former ETF.com CEO), believes that Bitcoin's surge is not about "ignoring war" or just the result of "inflation expectations," but is directly driven by the geopolitical conflict itself.
Hougan puts forward a more explanatory framework — Bitcoin is not a single asset, but a "superimposed bet": on one hand, it competes with gold for the status of "store of value"; on the other hand, it also bets, in a low probability but highly resilient manner, on becoming a true global currency.
In the past, this second-layer logic seemed more like a distant imagination. But as the financial system is gradually being "weaponized," this assumption is moving from the edge towards reality. From SWIFT sanctions to the rise of parallel settlement networks, and Iran's attempt to collect shipping tolls in Bitcoin, Bitcoin is no longer just a tool against inflation but is also being drawn into the borderlands of a national-level game.
In this context, Bitcoin's pricing logic has also changed. It is no longer merely driven by liquidity, tech stocks, or risk appetite, but is starting to price in the "uncertainty of the global monetary system." As conflict increases the probability of realizing its "monetary properties" and amplifies the volatility of the global financial system, the upside potential of this asset is also being re-opened.
If, in the past five years, Bitcoin's narrative has focused on being "digital gold," what is emerging now is a more complex dual role: both a store of value tool and a potential depoliticized settlement medium. Once this structure is established, its market boundary may no longer be limited to the $3.8 trillion corresponding to gold.
The following is the original text:
Bitcoin has shown relative strength since the outbreak of the Iran conflict. Since the U.S. and Israel began airstrikes against Iran on February 28, Bitcoin has risen by 12%, while the S&P 500 Index has fallen by 1%, and gold has fallen by 10%.
This has caught many off guard. Bitcoin has always been seen as a risky asset, with many initially believing that it should fall in the "risk-off" sentiment triggered by geopolitical conflicts. As a result, various explanations started to emerge: some believed that geopolitics had nothing to do with Bitcoin; others pointed out that wars often lead to currency debasement, which could be a long-term positive for Bitcoin.
Neither of these explanations is accurate. Bitcoin's strong performance in this crisis actually stems from the conflict itself. Understanding this point is crucial.
A Single Investment, Dual Bet
Buying Bitcoin essentially involves making two simultaneous bets.
First, you are betting that Bitcoin will become "digital gold" and compete with physical gold in the $38 trillion "store of value" market. This is currently Bitcoin's primary use case and a bet that I find very attractive. As I have explained before, if Bitcoin captures about 17% of this market over the next decade, the price of Bitcoin could potentially reach $1 million.
However, when you buy Bitcoin, you are actually making a second bet—that one day, perhaps, Bitcoin will operate as a traditional currency.
In the past, I have always seen this as an "out-of-the-money call option": a speculative bet on a future that seemed unlikely to materialize. After all, for most of Bitcoin's existence, this possibility seemed extremely remote to most people. Until a few years ago, the global financial system was almost entirely built on the dollar's track, and using a highly volatile, early-stage "cryptocurrency" for international trade sounded more like a fantasy.
A turning point came in 2022 when the United States kicked Russia out of the dollar-dominated SWIFT system. The French Finance Minister called it a "financial nuclear weapon," alerting other countries as well. China rapidly set up parallel financial systems, and other countries took action too. Russia moved 99% of its financial activities to these new systems, and other countries began to follow suit.
At that time, I had thought that "weaponizing" SWIFT might open up space for Bitcoin: if countries gradually become reluctant to rely on the dollar-based system, transitioning to a "depoliticized" alternative at some stage would also make sense.
And in this Iran conflict, we did see the early (and unsettling) manifestation of this trend: Iran, in an interview with the Financial Times, stated that it would start charging every vessel passing through the Strait of Hormuz $1 per barrel (about $20 million per day) as a "transit fee" and settle in Bitcoin.
Clearly, this move has raised significant concerns about sanctions evasion and money laundering. While it may, in some ways, be an improvement—over the years, Iran has used China's financial system to evade U.S. sanctions, which is harder to track than cryptocurrency—it also brings new risks.
At the same time, it has revealed a reality that transcends the current conflict: in a world where countries are increasingly weaponizing the financial system, Bitcoin is gradually becoming a depoliticized alternative.
Option Pricing Logic
This is also why I analogize Bitcoin's potential as a currency to a "deep out of the money call option."
An option's value typically increases due to two main factors: either an increase in the probability of reaching the target price or an increase in the underlying asset's volatility.
In this Iran conflict, both of these factors are at play: first, the probability of Bitcoin being used as a "currency" has increased; second, global monetary system uncertainty and volatility have risen.
This analytical framework can help us understand two important things. First, in future geopolitical conflicts, Bitcoin is likely to continue rising—especially in regions caught between the U.S. and China systems. Second, Bitcoin's potential market size may be much larger than the $38 trillion gold market.
For the past five years, we have almost only seen Bitcoin as a "store of value" tool. But if it begins to take on both the roles of "store of value" (similar to gold) and "medium of exchange" (similar to the U.S. dollar), then perhaps we need to reassess our long-term expectations for its space.
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