Traditional Exchange Closures Trigger Global On-Chain Trading Surge

Crypto Becomes the World's Financial Hub Over the Weekend

News of U.S. military strikes on Iranian territory broke overnight on February 28 — while traditional stock exchanges were shuttered. With no conventional instruments available to react to the geopolitical shock, investors flocked to 24/7 on-chain platforms in unprecedented numbers.

Bitwise Chief Investment Officer Matt Hougan described cryptocurrencies as the "world's primary trading venue" in the wake of the events. According to Hougan, on-chain space remained the center of the financial world for nearly the entire Sunday, marking the first time in his memory that crypto markets became simply "the market, period."

Why This Matters

The episode highlighted a fundamental advantage of decentralized finance — round-the-clock availability regardless of traditional market schedules. The migration of investor activity to on-chain infrastructure during a critical geopolitical moment could accelerate the convergence of blockchain-based systems with conventional finance.

The capital shift to decentralized venues produced dramatic spikes across multiple platforms:

• Hyperliquid saw surging futures volumes for both oil and crypto;
• Daily trading volume for Tether's tokenized gold (XAUT) exceeded $300 million;
• Prediction markets Kalshi and Polymarket hit record trading volumes;
• Bitcoin and Ethereum attracted heightened trader attention.

Hougan Revises His On-Chain Timeline

The Bitwise executive acknowledged that the weekend's events forced him to fundamentally reassess his forecasts. He previously expected on-chain markets to develop on the periphery over the next 5–10 years. Now he believes their integration into traditional finance will happen far more rapidly.

Hougan argues that banks, hedge funds, and corporate traders essentially have no choice: they will need to set up stablecoin wallets, learn to trade on DEXes, and familiarize themselves with tokenized assets. As the Bitwise director put it: "Even if you don't, someone else will."

Bitcoin in the 60/40 Portfolio: Updated Bitwise Research

Alongside the market commentary, Hougan and quantitative analyst Mallika Kolar published an updated study examining Bitcoin's impact on the classic 60% equities / 40% bonds investment portfolio. The analysis covered market data from January 2014 through December 2025.

"New study update: Adding bitcoin to a 60/40 portfolio has increased cumulative and risk-adjusted returns in 100% of three-year holding periods. The win rate over two years is 93%! Updated study from @Bitwise with data through year-end 2025." — Matt Hougan (@Matt_Hougan), original post

Key findings from the research:

• The baseline 60/40 strategy delivered cumulative returns of 127.9% (7.1% annualized) over the study period;
• A 2.5% Bitcoin allocation with quarterly rebalancing boosted the result to 187.4%;
• A 5% allocation nearly doubled the total return to 258.5%;
• The 2.5% allocation had minimal impact on maximum drawdown: 23.7% versus 22.1% for the classic strategy.

Three Rules: Time Horizon, Rebalancing, and Position Limits

The analysts emphasized that Bitcoin improves risk-adjusted returns only when three conditions are met: extended holding periods, regular rebalancing, and strict position-size limits.

The optimal investment horizon is three years or more. Over one-year periods, Bitcoin improved portfolio returns in 76% of cases. Over two years, the success rate climbed to 94%. For any three-year window, the probability of positive outcomes reached 100%.

Skipping rebalancing dramatically increases risk. A buy-and-hold approach with a 2.5% Bitcoin allocation could have generated 421.4% returns, but the portfolio's maximum drawdown would have ballooned to 50.9%. Quarterly rebalancing was identified as the optimal approach — preserving strong returns while keeping volatility within acceptable bounds.

The researchers also identified a non-linear relationship between Bitcoin allocation size and risk metrics. Allocations ranging from 0.5% to 4.5% have virtually no effect on maximum drawdown. However, beyond the 5% threshold, potential losses begin to escalate sharply while Sharpe ratio gains diminish.

Bitwise stressed that past performance does not guarantee future results, but a decade of data confirms that moderate Bitcoin exposure (up to 5%) structurally improves the metrics of any diversified portfolio.

Earlier, on March 2, analysts at London Crypto Club said the U.S. and Israeli military operation against Iran would have a positive effect on Bitcoin's price.