MW Bitcoin still has one thing going for it that investors are missing

By Jurica Dujmovic

Governments increasingly are using cryptocurrency to gain geopolitical power and independence from the dollar

The geopolitical appeal of crypto isn't about replacing the U.S. dollar - it's about creating leverage

Crypto is no longer just about the next bull run. It's about geopolitics, regulation and the reshaping of global finance.

When El Salvador adopted bitcoin as legal tender in 2021, it looked less like a financial experiment and more like a political statement. The tiny Central American nation wasn't just hedging against inflation or chasing tech headlines - it was signaling independence from the global financial system anchored to the U.S. dollar.

Fast forward to today - digital assets are no longer just a speculative play. They've entered the geopolitical arena, becoming instruments of soft power for countries looking to project influence, manage reserves or sidestep sanctions.

For retail investors, the message is simple: Crypto is no longer just about the next bull run. It's about geopolitics, regulation and the reshaping of global finance. And in a world where money has always been power, digital money is becoming a new way to play the game.

From Wall Street to the world stage

Smaller nations can experiment, diversify or signal dissent without needing permission from the Federal Reserve or the IMF.

For years, the story of crypto was told in terms of market cycles - booms, busts, and bitcoin's (BTCUSD) next halving. But in the background, governments have been exploring digital assets as part of broader statecraft:

-- Sanctions pressure: Russia and Iran have turned to crypto and blockchain-based settlement systems as Western sanctions cut them off from U.S. dollar-based finance. North Korea's state-backed hackers have siphoned off billions of dollars in digital assets to fund weapons programs.

-- Reserve diversification: Economies from Argentina to Nigeria see crypto adoption not just as grassroots rebellion against inflation, but as a quiet hedge against dollar dominance.

-- Soft-power branding: El Salvador's "bitcoin nation" experiment put it on the global map, while Singapore and the UAE have courted crypto firms to cement their reputations as innovation hubs.

The geopolitical appeal of crypto isn't about replacing the U.S. dollar DXY - it's about creating leverage at the margins. For decades, dollar dominance has been self-reinforcing: Global trade is invoiced in dollars, central banks hold dollar reserves, and the entire correspondent banking system runs through New York. That gives the U.S. enormous structural power, but it also creates resentment.

Crypto offers an alternative not because it's superior, but because it exists outside that architecture. Even if its adoption remains limited, the fact that another option exists changes the calculus. Smaller nations can experiment, diversify or signal dissent without needing permission from the Federal Reserve or the IMF. In geopolitics, having an exit - even a narrow one - gives power.

Sanctions, shortcuts and workarounds

Sanctions lose some of their bite when alternative payment channels exist, yet cracking down on crypto entirely risks stifling innovation.

One of the clearest geopolitical uses of crypto has been as a workaround for sanctions. The U.S. and European Union wield restrictions on banking access and dollar clearing as a cornerstone of foreign policy. But crypto, by design, exists outside that system.

Russia, which has been cut off from much of the global financial network, has explored using crypto for cross-border settlements. While volumes remain relatively small compared to oil or gas trade, the signal is unmistakable: Alternatives to SWIFT, the international payments messaging system, are on the table.

Iran has legalized crypto mining in part to generate reserves it can use for imports, a way to soften the bite of banking sanctions. And in North Korea's case, hacking groups linked to the state have stolen billions in digital assets, using them to bypass restrictions on weapons funding.

For U.S. policymakers, this trend poses a dilemma. Sanctions lose some of their bite when alternative payment channels exist, yet cracking down on crypto entirely risks stifling innovation.

Dollar dependence and diversification

Another driver is the global reliance on the U.S. dollar. Around 60% of international reserves are still held in dollars, giving Washington outsize influence. For some nations, experimenting with crypto is a hedge.

China has gone the centralized route, pushing its digital yuan (CNYUSD), or e-CNY, to facilitate trade with its Belt and Road Initiative partners. While not decentralized like bitcoin, it reflects the same impulse: to reduce reliance on the dollar.

Elsewhere, countries with fragile currencies are seeing bottom-up adoption. In Argentina, with annual inflation topping 117% in 2024, citizens use stablecoins pegged to the U.S. dollar as a safe store of value. Despite a government ban, Nigeria has some of the highest per-capita crypto usage in the world. For these economies, crypto isn't an abstract asset class - it's a survival tool.

Read: Bitcoin rout picks up steam as investors fret over a new 'crypto winter'

Crypto as national branding

Digital assets are also being used as soft-power branding tools. El Salvador's bitcoin experiment has drawn skepticism from the IMF and global lenders, but President Nayib Bukele has used it to burnish his reputation as a visionary disruptor. His government has even launched "bitcoin bonds" aimed at attracting crypto capital for infrastructure projects.

Meanwhile, the UAE and Singapore have positioned themselves as global crypto hubs. By offering clear regulations and welcoming exchanges, they project themselves as forward-looking, innovative financial centers. Just as London and New York built influence through banking, these smaller states are betting that crypto ecosystems can yield similar benefits.

For them, the strategy is less about holding bitcoin reserves and more about shaping perception: being seen as open to new technologies, new capital and new forms of global finance.

How crypto can crack your portfolio

When countries use crypto for political ends, retail portfolios are exposed to geopolitical whiplash.

For retail investors, these geopolitical shifts may seem distant. But they carry implications for portfolios.

1. Markets tied to politics: Crypto price swings are no longer driven only by tech adoption or speculation. Political developments - sanctions on Russia, a new regulation from the E.U. - can move prices as quickly as a Federal Reserve statement. Retail traders should expect politics to become a recurring factor in crypto's volatility.

2. The "narrative premium": Markets trade on stories as much as fundamentals, and crypto is uniquely narrative-driven. A sovereign state adopting bitcoin, or rumors of crypto settlement deals between sanctioned nations, can ignite speculative runs. Retail investors who understand these narratives may spot momentum earlier, but must also be prepared for abrupt reversals when the stories fizzle.

3. Unusual access: Unlike gold reserves or special drawing rights at the IMF, crypto assets are accessible to everyday investors. Retail buyers can hold the same bitcoin that El Salvador's treasury holds. That creates unusual overlap between retail speculation and sovereign experiments. The opportunity is enticing, but so is the risk: When countries use crypto for political ends, retail portfolios are exposed to geopolitical whiplash.

Plus: 'My retirement is completely in bitcoin': Why don't more people do what I do?

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-Jurica Dujmovic

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December 02, 2025 07:50 ET (12:50 GMT)

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