Bitwise CIO: $1M Bitcoin Price Realistic as Dollar Hegemony Weakens

Matt Hougan, chief investment officer at Bitwise, published an analysis on April 13 arguing that geopolitical instability—driven by the Ukraine conflict and recent US-Israeli tensions with Iran—is creating conditions for Bitcoin to reach over $1 million per coin. Hougan’s thesis centers on the weakening of US dollar dominance in global transactions and the corresponding rise of Bitcoin as an alternative, “apolitical” currency. He cited recent performance data showing Bitcoin gained 12% since the Iranian conflict began on February 28, while the S&P 500 declined 1% and gold fell 10% over the same period.

Geopolitical Instability as a Driver of Bitcoin Adoption

Hougan argues that international conflicts increase the volatility and unpredictability of the global financial order, which in turn increases Bitcoin’s value as a hedge mechanism. He frames Bitcoin as an “out-of-the-money call option” on the probability of broader currency adoption. “When nations feud, the incentive to deal with apolitical money like bitcoin goes up,” Hougan stated in his analysis. He specifically noted that when the Middle East conflict broke out, the world’s monetary order became more volatile, which he argues directly increased the probability of Bitcoin becoming a global currency and therefore made it a more valuable asset.

The Decline of US Dollar Hegemony and Rise of Alternative Currencies

A key element of Hougan’s analysis is the documented shift away from US dollar settlement in international trade. He cited data showing that Russian-yuan trade settlement increased dramatically following the start of the Ukraine conflict: at the conflict’s onset, only 2% of Russian trade was settled in Chinese yuan; today, that figure stands at 99%. This shift, Hougan argues, reflects a broader trend in which nations are reducing their reliance on the US dollar as the default currency for cross-border transactions. Alongside the increased use of the Chinese yuan, Hougan noted that Bitcoin is being increasingly considered as an alternative settlement mechanism precisely because it operates independently of any single nation’s political system.

Matt Hougan, CIO Bitwise

Iran’s Announcement of Bitcoin Payments for Strait of Hormuz Tolls

Hougan highlighted a significant recent development: Iran announced it would require tolls for passage through the Strait of Hormuz to be paid in Bitcoin. While Hougan acknowledged uncertainty about whether Iran will ultimately use Bitcoin or default to the Chinese yuan, he emphasized that the announcement itself signals a broader shift. “Countries are slowly finding ways to weave bitcoin—an apolitical currency—into global commerce,” Hougan stated. This development, in his view, exemplifies the practical steps nations are taking to reduce dollar dependency and explore alternative payment mechanisms.

Bitcoin as a Dual-Role Asset: Store of Value and Currency

Hougan’s price projection is grounded in a specific valuation framework. He argues that if Bitcoin assumes a dual role—functioning both as a store of value (similar to gold) and as a medium of exchange for international transactions (similar to the US dollar)—then the $1 million price target becomes realistic. “International transactions are a very large market,” Hougan noted, implying that if Bitcoin captures even a modest share of global settlement flows, the asset’s market capitalization would need to expand significantly to reflect that utility.

Hougan explained that Bitcoin’s strength during geopolitical crises stems directly from the conflicts themselves, not merely from secondary effects like war-induced monetary expansion. As nations seek to reduce their exposure to any single currency system, Bitcoin’s appeal as a politically neutral medium of exchange increases. This, he argues, is the mechanism by which continued geopolitical tension could drive the asset toward and beyond the $1 million mark.

Matt Hougan, CIO Bitwise

Implications for Bitcoin’s Market Role and Valuation

According to Hougan’s analysis, the implications of Bitcoin being adopted for international transactions are multifaceted. First, Bitcoin is likely to function increasingly as a hedge against geopolitical risk; as international tensions rise and shake global alliances, the volatility of the world’s financial order increases, which raises Bitcoin’s value as a protective asset. Second, and more directly relevant to price forecasting, widespread adoption of Bitcoin in international commerce could dramatically increase demand for the asset. Hougan summarized this potential: “If bitcoin takes on a dual role as a store of value (like gold) and a currency (like the dollar), then $1 million per bitcoin begins to look like a starting point.”

Frequently Asked Questions

Q: Why does geopolitical instability increase demand for Bitcoin?

According to Hougan’s analysis, geopolitical conflicts increase the volatility and unpredictability of the global financial order. When nations face international tensions, they seek to reduce their reliance on any single nation’s currency (particularly the US dollar) and explore alternative settlement mechanisms. Bitcoin, being politically neutral and not controlled by any government, becomes more attractive as a medium of exchange and store of value during these periods of instability.

Q: What is the basis for Hougan’s $1 million Bitcoin price target?

Hougan argues that if Bitcoin assumes a dual role—functioning as both a store of value (like gold) and as a medium for international transactions (like the US dollar)—then a $1 million price becomes realistic. International transactions represent a very large market; if Bitcoin captures a meaningful share of global settlement flows, its valuation would need to expand substantially to reflect that utility. At current Bitcoin supply levels, capturing significant international transaction volume would imply a much higher price per coin.

Q: Has Iran actually committed to using Bitcoin for Strait of Hormuz tolls?

Iran announced it would require tolls for Strait of Hormuz passage to be paid in Bitcoin; however, Hougan acknowledged that it remains unclear whether Iran will ultimately use Bitcoin or opt for the Chinese yuan instead. Regardless of Iran’s final choice, Hougan views the announcement as a signal that nations are actively exploring alternatives to US dollar settlement, including Bitcoin, as they seek to reduce dollar dependency.