Bitcoin’s Two Use Cases Are Fueling Its Surge During Geopolitical Turmoil

Bitcoin’s latest rally is defying a long-standing market assumption – that the cryptocurrency behaves like a risk asset during geopolitical crises.

The world’s largest digital asset climbed to nearly $75,000, its highest level in almost a month, even as tensions in the Middle East escalated. While traditional markets wavered, Bitcoin moved in the opposite direction.

According to Matt Hougan, the move is not coincidental. Instead, he argues that Bitcoin is benefiting directly from geopolitical instability, challenging the notion that it should fall during periods of increased uncertainty.

Dollar Dominance Cracks

Since US and Israeli airstrikes began on February 28, Bitcoin has risen 13%, while traditional assets have moved in the opposite direction, with the S&P 500 declining 1% and gold falling 10%. This divergence has challenged the conventional assumption that BTC behaves purely as a risk asset and should therefore decline during periods of geopolitical stress.

Hougan’s explanation centers on the idea that BTC represents two distinct but related use cases – it is already positioned as a store of value similar to gold, while also carrying the potential to evolve into a currency used for international transactions.

The second aspect is less established, but becomes more relevant during periods of instability, when traditional financial systems face pressure.

Geopolitical conflict strengthens both roles simultaneously. On one hand, uncertainty increases demand for alternative stores of value. On the other hand, it exposes weaknesses in the current global financial system, particularly its reliance on the dollar-based financial rails. This has been developing for several years, and a major turning point was following Russia’s invasion of Ukraine.

After the conflict began, Russian banks were removed from the SWIFT payments network, which effectively limited the country’s access to the global financial system. The move showed that financial infrastructure tied to the dollar can be restricted for political reasons. This prompted other nations to look for alternatives.

China increased its role in global settlement flows, and trade between Russia and China moved away from the dollar toward local currencies. Over time, this reduced reliance on dollar-based payment systems and demonstrated that alternatives can develop when needed.

These changes matter for Bitcoin because they highlight demand for a payment method that is not controlled by any single country. Hougan explained that in these situations, an apolitical alternative like Bitcoin becomes more relevant. This does not mean it replaces existing systems, but it increases the chances that it could be used alongside them, especially in cross-border transactions.