As digital assets gain traction, the question of whether bitcoin can replace gold as a hedge persists. André Dragosch, European head of research at Bitwise Asset Management, argues that investors should consider using both, as each serves a different purpose.
Gold: Protection Against Stock Market Volatility
Historically, gold has performed well during equity sell-offs. Its long-term correlation with the S&P 500 hovers near zero and often turns negative in periods of stress. For example, in the 2022 market downturn, gold rose roughly 5% while the S&P 500 fell nearly 20%, underscoring its reputation as a classic “safe haven.”
Bitcoin: Hedge Against Bond Market Stress
Bitcoin’s behavior differs. While it can be volatile during equity declines, it shows low or slightly negative correlation with U.S. Treasuries. Rising yields and bond market stress have occasionally coincided with bitcoin holding up better than gold, suggesting it can act as a counterweight to fixed-income risk.
Performance Trends in 2025
Through August, gold has climbed more than 30% year-to-date, largely benefiting from equity volatility amid tariffs, slowing growth, and political risk. Bitcoin has gained approximately 16.5% this year, performing well as Treasury yields fell around 7.3%. The S&P 500, by comparison, is up roughly 10%, highlighting the differing hedging roles of each asset.
Portfolio Implications
Dragosch suggests a combined approach: gold remains the preferred hedge for equities, while bitcoin may help portfolios navigate bond market pressures. Bitwise research indicates holding both can improve diversification and enhance risk-adjusted returns.
Caveats
Correlations are dynamic. Bitcoin’s growing institutional adoption, especially through spot ETFs, has increased its alignment with broader markets, reducing its effectiveness as a pure bond hedge. Regulatory developments, liquidity shocks, or macroeconomic events could move both assets in tandem, limiting their hedging power.
The takeaway: gold and bitcoin are not interchangeable. Investors in 2025 may benefit from viewing them as complementary hedges—each addressing different market risks rather than replacing the other.
