Bitwise: Bitcoin could be adopted as currency in geopolitical chaos
Recent events regarding the use of bitcoin as a potential payment method to secure passage through the Strait of Hormuz have put the main cryptocurrency in the geopolitical spotlight, and analysts are now examining the possible effects of this use case.
Matt Hougan, Chief Investment Officer at Bitwise, believes that adding this functionality to the existing store of value feature of bitcoin, in a period of geopolitical chaos, could propel its price to astronomical heights.
On social media, Mr. Hougan emphasized that the new possibility of bitcoin becoming a ‘traditional currency’, although unlikely, was not as far-fetched as one might have thought a few years ago, citing as evidence the announcement that Iran would seek to collect 1 dollar in bitcoins per barrel of oil as payment for the Strait of Hormuz, which would yield $20 million per day.
He stressed that this illustrated “a reality that transcends the current conflict: in a world where countries have militarized their financial systems, bitcoin emerges as a non-political alternative.”
In this regard, Mr. Hougan likened this bet to an out-of-money call option, explaining that during the conflict with Iran, two necessary conditions for this evolution emerged: an increased likelihood that bitcoin would be used as a currency and an increase in global monetary order volatility.
Previously, he had estimated that bitcoin could reach up to $1 million by capturing 17% of the store of value market, valued at $38 trillion, over the next decade. But today, as bitcoin has the potential to expand its uses beyond this established scenario, the target could be set even higher.
“If bitcoin starts to play a dual role as both a store of value (like gold) and a full-fledged currency (like the dollar), we may need to reconsider our upward targets,”
concluded Mr. Hougan.
