Bitcoins 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 US and Israeli airstrikes began on February 28, while the S&P 500 is down 1% and gold 10%. For an asset routinely dismissed as a leveraged tech bet during risk-off episodes, this 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 competing for share of the $38 trillion store-of-value market.
The other is what he calls an out-of-the-money call option on bitcoin that acts as an actual currency, a bet he says most investors have treated as borderline irrelevant until now.
The Iran conflict changed the equation on the second bet. Iran said it will charge a fee of $1 per barrel in bitcoin from ships passing through the Strait of Hormuz, which equates to 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, although the circumstances were far from ideal.
“In a world where countries have weaponized their financial rails, bitcoin is emerging as an apolitical alternative,” Hougan wrote, tracing the shift back to the US kicking Russia out of the SWIFT network in 2022, a move France’s finance minister called a financial “nuclear bomb” at the time.
The setting frame is what makes the argument worth watching.
Options gain value when either the probability of hitting the strike price improves or the volatility of the underlying asset increases. Hougan argues that the Iran conflict delivered both simultaneously, increasing the odds of bitcoin being used as a currency while increasing the volatility of the global monetary order.
If his framing holds, it implies that bitcoin should rally during future geopolitical conflicts, especially those involving countries caught between the US and Chinese financial systems, and that bitcoin’s total addressable market 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. That says more about the limits of dollar-denominated enforcement than it does about bitcoin’s readiness to act as a neutral settlement layer. The infrastructure for it, stablecoin settlement, cross-border payment rails, state-owned wallet adoption, remains early at best.
But Hougan’s core observation stands. The market is pricing bitcoin differently during this conflict than during any previous geopolitical shock, and the “digital gold” thesis alone does not explain why.
