I don't know how proactive your friend is when it comes to trying to assert his masculine identity, but I think a good counter would be that a lot of men's organizations encourage emotional intimacy and displays of affection like hugs precisely because they are said to reassert masculine identity and possibly prevent homosexuality. Not saying that I necessarily agree with this or anything, but I think it could be a possible counter.
Personally I think that this friendship sounds a bit toxic. If he can't accept a simple comment of appreciation for his friendship then I can only imagine what kind of other insecurities might rear their heads throughout the course of your friendship. That's just me though.