Would a significant portion of the world’s economy moving online make this physical power less relevant?l to the point where the empire can crumble and the American military still be far dominant?
Discussion
Generally when an empire crumbles the military falls along with it. It usually takes a while for the perception of the military strength of the empire to fall back into reflecting reality though. The reserve currency status is always the last vestige of greatness that the empire clings onto after the empire has fallen away.
I hope a Bitcoin economy will shrink governments and militaries over time and dominance over other countries may not be as necessary as today to do well. Maybe countries with a bigger economy and smaller military are in a better position after the transition. Maybe it will continue like today, as it's maybe necessary to invade countries for energy to mine bitcoin. Many possible outcomes...
If there is no real difference, whether you say the empire has fallen or not is just a semantic thing.
The difference is whether the military dominates and whether the currency dominates.
If you are wondering whether the still-powerful miliary would take actions to ensure that the less-powerful currency continues to dominate, then that is an interesting question. I think the answer is probably yes. Some people interpret American military interventions as a defense of dollar hegemony, and ignore the claimed reasons.