Bitcoin overperformance 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 U.S. and Israeli airstrikes began on Feb. 28, while the S&P 500 has fallen 1% and gold 10%. For an asset regularly seen as a leveraged technology bet during episodes of risk aversion, this performance has forced a rethink.
In an article on X, Hougan reframed bitcoin as two simultaneous bets. The first is the familiar thesis of “digital gold,” vying for a share of the $38 trillion store of value market.
The second is what he calls an out-of-the-money call option on Bitcoin functioning as a real currency, a bet he says most investors have considered irrelevant until now.
The Iranian conflict changed the situation on the second bet. Iran said it would collect a toll of $1 per barrel of bitcoin on ships passing through the Strait of Hormuz, the equivalent of about $20 million a day.
This tax is one of the first concrete examples of a sovereign state using bitcoin as a settlement mechanism for physical commerce, although the circumstances were far from ideal.
“In a world where countries have weaponized their financial networks, bitcoin emerges as an apolitical alternative,” Hougan wrote, tracing the U.S. change of course that expelled Russia from the SWIFT network in 2022, a move the French 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 hitting the strike price improves or the volatility of the underlying asset increases. Hougan argues that the Iranian conflict produced both simultaneously, increasing the chances of Bitcoin being used as currency while increasing the volatility of the global monetary order.
If his view is valid, it implies that bitcoin is likely to recover during future geopolitical conflicts, particularly those involving countries caught between the U.S. 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 uses bitcoin as a sanctioned state acting out of necessity, not preference. This says more about the limits of enforcing dollar-denominated rules than it does about Bitcoin’s desire to function as a neutral settlement layer. The infrastructure needed for this, stablecoin settlement, cross-border payment lanes and sovereign wallet adoption, are in their infancy at best.
But Hougan’s fundamental observation remains. The market is pricing bitcoin differently during this conflict than during any prior geopolitical shock, and the “digital gold” thesis alone does not explain why.
