Gold and Bitcoin: Two Different Hedging Tools in Times of Volatility

In the context of the Trump administration showing strong support for cryptocurrencies, many investors are starting to question: is gold – the traditional safe-haven asset for decades – gradually losing its position to Bitcoin? André Dragosch, Head of European Research at Bitwise Asset Management, believes that the answer is not that simple. He presented a "rule of thumb" (rule-of-thumb): gold remains the most effective hedge against risks from the stock market, while Bitcoin increasingly plays a counterbalancing role to tensions in the bond market. Gold: A classic hedge when stocks plunge History has shown that gold is often a safe haven whenever the stock market falls into crisis. The long-term correlation between gold and the S&P 500 index is usually close to 0, and during periods of stress, it even turns negative. For example, during the bear market of 2022, when the S&P 500 fell nearly 20%, the price of gold increased by about 5%. This explains why gold still holds the role of a "safe haven" in the eyes of global investors. Bitcoin: The new counterweight of the bond market On the contrary, Bitcoin often struggles when stocks are in free fall. In 2022, the price of BTC fell by more than 60% along with the tech stock group. However, Bitcoin's relationship with U.S. government bonds is quite interesting. Many studies indicate that Bitcoin has a low, even slightly negative correlation with government bonds. This means that when bond yields increase ( bond prices decrease ) – as in the year 2023 when concerns about U.S. public debt increased – Bitcoin has shown better resilience than gold. According to Dragosch, this means that investors do not need to choose "one of the two", but can use both to hedge against different types of risks. Reality of 2025: Who does better? This year's developments have clearly reflected this separation. Gold has increased by more than 30% since the beginning of the year ( according to the World Gold Council ), due to demand for hedging against fluctuations from tariffs, slowing growth, and political risks. Bitcoin recorded an increase of about 16.46% ( according to CoinDesk ), despite the yield on 10-year U.S. Treasury bonds decreasing by about 7.33% ( MarketWatch ). The S&P 500 index increased by about 10% ( CNBC ). Thus, as Dragosch noted: gold shines when stocks fluctuate, while Bitcoin maintains its counterbalancing role in the context of the bond market facing pressure. Important notes However, it should be emphasized that the correlation is not fixed. In 2025, Bitcoin is increasingly tied to stocks due to huge capital flows from spot ETF funds. This causes BTC to gradually take on the characteristics of a "mainstream risk asset," reducing its ability to serve as a pure hedge against bonds. In addition, short-term shocks – such as policy changes, lack of liquidity, or macroeconomic risks – can cause both gold and Bitcoin to plummet, limiting the ability to protect the portfolio. Conclusion: Use in parallel to optimize Although the Trump administration had a positive attitude towards cryptocurrency, Dragosch and many other experts assert: it is time to allocate both gold and Bitcoin in the portfolio instead of replacing one with the other. Gold remains a solid barrier when stocks weaken. Bitcoin can support the portfolio when bonds are under pressure from rising interest rates and public debt burdens. In today's complex financial environment, the smart combination of these two assets is the key to helping investors both protect their portfolios and seize growth opportunities.