Bitwise: US-Israeli attacks on Iran will forever change the financial industry.

Author: Matt Hougan, Chief Investment Officer, Bitwise; Translated by: Jinse Finance

Sunday's US-Israeli attacks on Iran brought the ever-present crypto market into the spotlight. Traders won't forget it.

I've always felt that the shift of the financial industry to on-chain is inevitable.

Blockchain allows assets to be traded and settled instantly, 24/7/365, at a lower cost than traditional systems. This makes traditional stock exchanges and T+1 settlement methods seem obsolete.

But I often wonder: When will this shift happen? What factors will drive the system to change?

After all, most people don't notice the delays in existing systems. When my uncle bought stocks with his Charles Schwab account, he didn't care that settlement would take a day, or that it would trigger a series of complex operations like the Rube Goldberg machine, involving mysterious institutions like NSCC, DTCC, and Cede & Co. He bought the stocks, and they appeared in his account. Everything went smoothly, without any hiccups.

Therefore, I believe the cryptocurrency market will develop along the fringes—in the next 5 to 10 years, it will primarily serve native cryptocurrency users and others who struggle to fully integrate into the traditional financial system, such as international retail investors wanting to trade US stocks. But ultimately, I think these systems will become so sophisticated that they will quietly replace existing systems, and institutions like the New York Stock Exchange will gradually transition to tokenized markets, much like the transition from exchange-traded to online trading. This will be a classic tech story: disrupt the periphery first, then take control of the core. I estimate this will take 5 to 10 years. Last weekend proved me wrong. Now I'm convinced it will happen much faster than I thought. What happened last weekend? President Trump announced the attack on Iran at 2:30 a.m. ET on Sunday, February 28. This time of week is a special time for global financial markets because virtually all markets are closed. The US stock market is closed. The US futures market is closed. Major foreign exchange markets are closed. European markets are closed. Asian markets are closed. Essentially, the only markets open during this period are Middle Eastern stock markets such as Saudi Arabia and Qatar, which typically trade from Sunday to Thursday. However, these markets are limited in size and scope. Few Western investors trade there, and the range of assets they trade is also limited. In the past, if a major geopolitical shock occurred on Sunday morning, investors would typically wait until the US futures market opened at 6 PM (Eastern Time) on Sunday afternoon to understand its impact. But as demonstrated last weekend, they now have another option: they can turn to cryptocurrency-based trading platforms that offer 24/7/365 trading globally. This weekend, they did just that. On-chain finance was the focus of the financial world for much of Sunday. The decentralized exchange Hyperliquid, in particular, was under intense scrutiny. Hyperliquid offers perpetual futures for cryptocurrencies and "real-world" assets such as oil. Trading volume on Hyperliquid surged so much that Bloomberg, in its coverage of the oil price reaction to the explosion, directly cited Hyperliquid oil contracts as the most relevant price. (It's no coincidence that Hyperliquid's native token, HYPE, surged by about 30% over the weekend. My interpretation is that this is likely a prepayment by investors regarding Hyperliquid's future direction.) But Hyperliquid isn't alone. Tether's tokenized gold, XAUT, saw its 24-hour trading volume surge to over $300 million. Prediction markets like Kalshi and Polymarket also set new trading volume records. Crypto assets like Bitcoin and Ethereum also received significant attention. As far as I can recall, this is the beginning of the cryptocurrency market truly becoming a "market." Why this matters: If you're a hedge fund, bank, or other investor looking to participate in competitive trading, you have no choice: you must set up a stablecoin wallet and learn how to trade on the Hyperliquid platform. You need to understand XAUT, and you need to read about tokenized stocks. Because even if you don't, others will. This is like a ball starting to roll down a hill, becoming unstoppable. The biggest challenge in participating in on-chain markets is getting started—becoming familiar with wallets, stablecoins, and platforms like Hyperliquid and Uniswap. Once you've mastered these, all the new features of DeFi and on-chain finance are readily available. Easy access fosters exploration, and exploration drives trading volume. Of course, people will say: traditional markets can do this too! Nasdaq is offering 23/5 trading! We don't offer 24/7 trading because people don't need it! Well, whatever: Blockbuster said the same thing about Netflix, and Microsoft said the same thing about the iPhone. The shift to on-chain finance is inevitable. After this weekend, I'm even more convinced that this shift is happening faster than any of us imagined.