The price of Bitcoin has grown significantly over the last year. It has set new records continuously throughout 2024, peaking well past 95k on 21 November, thanks to a Trump-inspired bull run, and has been sitting at 60k USD for most of 2024 due to the launch of the first-ever Bitcoin ETF. Yet, to understand what has caused Bitcoin to more than double in the short space of a year, it would be wise to turn to the increasing global tensions defining the US and its hegemonic decline as we shift towards a multipolar society.
The rise in conflict and global geopolitical instability has heightened the need for a secure store of value away from FIAT currency. Bitcoin has become a wager on multipolarity, and as the US elects Trump into office, we should expect a more isolationist and protectionist society that weaponizes the dollar to follow, and the world must be prepared.
The US has had a long history of recent military intervention, and the benchmark of success for every US conflict can be measured by its exit strategy. Whether it be Iraq, Afghanistan or Libya, the withdrawal of the US army has frequently emboldened its adversaries. A retracting US and an unarmed Europe no doubt inspired Vladimir Putin to launch his invasion of the Donbas and Eastern Ukraine. On the eve of the invasion, BTC saw a rise in value of 16%, as millions of soon-to-be-sanctioned Russians sold risk-on assets and committed to a safer store of value. Bitcoin proved itself to be no longer just a novelty investment but a geopolitically correlated asset class with the power to support the coffers of nation-states, regardless of their politics.
A recent study by Professor Ayben Koy at Istanbul Ticaret University looked at the behaviour of BTC during the Israel-Palestine conflict and found that Bitcoin “can both react to geopolitical shocks and later stabilise as a hedge against further risks”. The study was also supported by the view that Bitcoin can act as “a safe haven asset” during a crisis. While still a volatile asset, as time goes on, there is every chance that as Bitcoin matures, it becomes a more reliable source of value during conflicts, not only giving citizens in deep turmoil a chance to retain wealth but also moving the world away from being locked in a biased political chokehold, exemplified by the current state of the Gaza strip, and America’s blatant support for Israel in that conflict.
Gold, for many years, has played the role of the doomsday asset class, yet Bitcoin has prevailed in recent years due to its ability to transcend borders. Gold, for all its benefits, is less capable of being transacted than Bitcoin in a crisis and is more susceptible to international reserve sanctions. Gold is fit for a rainy day, whereas Bitcoin is fit for the end of days, and with 43.4 million global refugees, Bitcoin’s appeal will not slow down anytime soon, as the world begins to wake up to the reality that ‘doomsday’ isn’t one catastrophic moment in time, but a consistent state of shared turmoil.
The falling influence of the dollar is exemplified through its weakened presence on the world stage. It is held in the reserves of almost all nations; Japan currently holds over $1.2 trillion in its reserves, and Switzerland holds $950bn. Yet, the US hasn’t held back in its weaponisation of the world’s most popular currency and marketplace, which led to China recently offloading $100bn dollars from its books in March 2023. China continues to de-dollarize its reserves, and with hefty import tariffs on the way, there is greater global demand than ever for non-US-aligned nations to move away from the Dollar, and edge closer towards emerging BRIC wealth hubs like Sao Paulo, Shanghai and Mumbai. This cultural shift has resulted in a 10% decrease in global dollar reserves over the last 20 years as nations continue to vote with their capital.
The current state of politics comes at the risk of both liberation and a deeper sense of oppression. The hegemonic power shift to a multipolar society will continue with Bitcoin functioning as the intermediary, and the world’s eyes will turn to Taiwan and the South China Sea. The Chinese economy has grown at a rate of 35% over the last 15 years, compared to the US's 27%, and while there is every chance that the world might soon be unburdened by US influence, we must ask ourselves – what will a world dominated by multiple authoritarian soft power dynamics look like?
A retracting and evermore cautious US, coupled with a Chinese government that is rapidly consolidating its BRICs, will lay the foundations for a full-scale takeover of Taiwan. When that day comes, those on the ground will not look west for safety; they will turn to the only true asset class that can give both hope and pragmatism in times of crisis.
Mass dependence is the foundation of every hegemony, and if your allies, in their darkest hour, turn to Bitcoin – then the hegemony is over, and a new world can take shape.