That might baffle some, but Michael Saylor, the self-proclaimed Bitcoin evangelist, just telegraphed his next big buy. Good for him. Strategy is cruising on more than 582k BTC and those unrealized gains are mind-boggling. But his bullish pronouncements, especially given the bubbling cauldron that is the Israel-Iran conflict, seem half-baked. We’re constantly instructed to view Bitcoin as the new digital gold, the hedge, the safe haven. But is it really that simple?

The answer is no. But Saylor conveniently glosses over three important points of the debate. This is particularly worrisome in light of the recently heightened risk of escalation around the Strait of Hormuz.

Hormuz Closure Impacts Everything

Coin Bureau's Nic Puckrin is right: a closed Strait of Hormuz changes everything. We're not just talking about a blip in oil prices. We're talking about a potential cascade of economic consequences. Twenty percent of the globe’s oil passes through that little shipping lane. Close it down, and you’re setting yourself up for a huge energy price increase. Think about it:

  • Supply Chain Chaos: Increased fuel costs immediately translate to higher shipping costs, impacting everything from food prices to consumer goods.
  • Inflationary Pressure: Businesses face increased operational costs, which they will inevitably pass on to consumers. Central banks, already struggling to contain inflation, will be forced to make difficult choices.
  • Recessionary Risk: Sky-high energy prices can choke off economic growth, potentially triggering a recession.

Saylor’s argument, or maybe hope, is that Bitcoin is an uncorrelated asset, immune to these traditional market forces. That's wishful thinking. In a real global economic crisis caused by such a closure, all bets are off as everything is suddenly highly negatively correlated. Middle-class folks must be able to feed their families, warm their houses, and keep their enterprises running. They’ll load up with heavy debt and even sell their Bitcoin to stay alive. The only time the idea of the digital gold is correct is when you have people’s luxury to consider it.

Should Bitcoin expect to maintain its $105,000 mark for good. With working families just trying to make ends meet these days, can it be worth anything? I think not.

"Decentralized" Needs Energy, Too

Bitcoin’s alleged “decentralization” has become the strength often invoked by its proponents, protecting it from an onslaught of geopolitical turmoil. That decentralization comes at a cost – a massive energy cost. The process of bitcoin mining currently uses more electricity than ¼ of the countries in the world. Where does that energy come from? Derived almost entirely from fossil fuels, and more and more, from facilities on the front lines of global supply chain disruption.

A closure of the Strait of Hormuz is not simply a price shock, it is an immediate and devastating shock to availability of energy. Envision that environment with energy getting rationed, or with governments directed to provide key services first without regard to Bitcoin mining. Suddenly, that supposedly decentralized network becomes vulnerable.

  • Mining Costs Skyrocket: Miners will face higher energy costs, squeezing their profit margins.
  • Hash Rate Declines: Some miners will be forced to shut down, reducing the network's security and resilience.
  • Regulatory Scrutiny Intensifies: Governments, facing energy shortages, may crack down on energy-intensive activities like Bitcoin mining.

Through MicroStrategy and personally, Saylor’s fortune is riding on Bitcoin’s long-term value proposition. Long-term value doesn’t matter if in the short term the network becomes structurally unsustainable. What happens to all of those ETF inflows when the lights go out on blockchain technology?

Greed Index Hides a Different Fear

The Crypto Fear & Greed Index is at 60, which means “greed” right now. What I really suspect is the bigger fear that’s deep down who knows how many levels between the surface and the core. It’s FOMO — the advisers’ fear of missing out — stoked by stories of Bitcoin being a new safe haven. Finally, everyone watches Saylor’s confidence, watches the ETF inflows and jumps in, investing in BTC to protect their wealth from geopolitical uncertainty.

This is a dangerous game. And there it is—the market, at its core, is an emotional game, not a logical one. Bitcoin’s ability to rally in the days after such an event and only fall 3% after the initial dip from the airstrikes proves its resilience. Consistency and power are not mutually inclusive.

  • False Sense of Security: The "safe haven" narrative can lull investors into a false sense of security, leading them to underestimate the risks.
  • Leveraged Positions: Many investors are using leverage to amplify their gains, making them even more vulnerable to a market correction.
  • Potential for a "Black Swan" Event: A major geopolitical shock, like a full-blown war in the Middle East, could trigger a panic sell-off, wiping out billions of dollars in value.

Saylor isn’t wrong to be confident about Bitcoin’s future. To do so he needs to provide a counterbalance. We must not ignore the legitimate dangers associated with a disruptive and unpredictable geopolitical world. The Strait of Hormuz is more than just a shipping lane. It's a potential choke point that could strangle the global economy and expose the weaknesses in Bitcoin's armor. Investors should be wary about this before naively chasing the siren song of “digital gold.” Don't be blinded by greed. Be aware of the fear that's really driving the market.