This week, Mark Cuban -- a well-known American billionaire and investor -- publicly sold the majority of his Bitcoin holdings. His reason was direct: Bitcoin did not protect him when geopolitical tensions between Iran and the United States escalated. He had expected Bitcoin to behave like a safe place to put money during a crisis, similar to how gold or Swiss francs tend to hold their value when things go wrong in the world. It did not. This came up directly in managing the Convictions and Autopilot portfolios, where Bitcoin is a core holding, and prompted a deeper look at what Bitcoin actually hedges -- and what it does not.
The idea that Bitcoin is "digital gold" or a hedge against macroeconomic chaos is one of the most widely repeated claims in crypto. The reasoning sounds intuitive: Bitcoin has a fixed supply (only 21 million will ever exist), it is not controlled by any government, and it cannot be inflated away. When governments mismanage their currencies, people often imagine Bitcoin as the natural refuge. But this is only part of the picture.
What Bitcoin actually hedges against is, primarily, distrust of the global financial system and expansion of the money supply. Charles Gave, the French economist and co-founder of Gavekal Research (the research firm whose framework underlies the Compass portfolio), would say that Bitcoin competes with gold in a very specific regime: when investors believe central banks are losing control and when real returns from financial assets are deeply negative. In those conditions, money flows toward things outside the system -- gold, hard currencies like the Swiss franc, and yes, Bitcoin. But that is a different scenario from a geopolitical flare-up between two countries.
When the US and Iran came into direct conflict, what typically happens in financial markets is a short, sharp flight to quality. Investors sell risky assets quickly and buy the things with the longest track record of working during crises: US Treasury bonds (government debt considered the world's safest asset), gold, and the Japanese yen. Bitcoin, despite being 16 years old, does not yet have that reflexive institutional trust. When professional fund managers need to reduce risk in a hurry, they do not reach for Bitcoin as their first shelter.
Worse, Bitcoin often sells off in these moments for a technical reason: leveraged positions. Many crypto traders borrow money to buy more Bitcoin than they could otherwise afford. When the market falls, they are forced to sell automatically to repay what they borrowed. This forced selling creates a cascade, turning a modest decline into a sharp one. So Bitcoin can actually fall harder than traditional risk assets in the first days of a crisis, even though its long-term case is unrelated to the crisis itself.
This does not mean Bitcoin is useless as a hedge. It does mean Bitcoin hedges the right things at the right time horizon. Over a period of years, in an environment where the US dollar is steadily losing purchasing power -- which is the central thesis of the Compass portfolio and the reason for holding gold -- Bitcoin has historically kept pace or done better. It is a hedge against long-term currency debasement, not against a short-term geopolitical shock. Mark Cuban may have been using the wrong tool for the job he needed done.
For the Convictions portfolio, this distinction matters. Convictions holds Bitcoin not as a crisis hedge but as a long-cycle bet on institutional adoption and digital store-of-value demand. The 30 percent allocation is sized for the macro cycle, not for geopolitical insurance. The portfolio mandate is explicit: it does not react to news events. It holds a fixed allocation and only exits if the total crypto market capitalization falls below its 200-week moving average (roughly the average price over the past four years), which would signal a structural bear market. Short-term noise -- even a high-profile investor selling -- does not change the thesis.
The practical takeaway is this: if you want protection specifically against a geopolitical crisis unfolding over days or weeks, Bitcoin is not the right tool today. Gold, US Treasury bonds, and certain currencies have that role. Bitcoin's hedge case is longer: it works when governments have over-borrowed, when inflation has run hot for years, and when trust in the official financial system is eroding slowly rather than collapsing in a single week. Understanding the difference between these two kinds of protection is one of the most important distinctions in macro investing.