Bitcoin’s war rally is forcing a rethink beyond ‘digital gold’

Bitcoin’s BTC$73,725.85 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 U.S. and Israeli airstrikes began Feb. 28, while the S&P 500 has fallen 1% and gold 10%. For an asset routinely dismissed as a leveraged tech bet during risk-off episodes, that performance has forced a rethink.

In a post on X, Hougan reframed bitcoin as two simultaneous bets. The first is the familiar “digital gold” thesis, competing for 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 an actual currency, a bet he says most investors have treated as borderline irrelevant until now.

The Iran conflict changed the math on the second bet. Iran said it will collect a $1-per-barrel toll in bitcoin from ships passing through the Strait of Hormuz, the equivalent of roughly $20 million per day.

The levy is one of the first real-world examples of a sovereign state using bitcoin as a settlement mechanism for physical commerce, even if the circumstances were far from ideal.

The options framework 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 the Iran conflict delivered both simultaneously, raising 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, particularly those involving countries caught between the U.S. 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. It says more about the limits of dollar-denominated enforcement than it does about bitcoin’s readiness to function as a neutral settlement layer. The infrastructure for that, stablecoin settlement, cross-border payment rails, sovereign wallet adoption, remains early-stage at best.

But Hougan’s core observation stands. The market is pricing bitcoin differently during this conflict than during any prior geopolitical shock, and the “digital gold” thesis alone doesn’t explain why.