As crypto’s popularity grows and government stances shift, investors are asking whether gold’s reign as the go-to hedge is under threat. Bitwise Asset Management’s European head of research, André Dragosch, says the picture is nuanced: gold and bitcoin serve different hedging functions, and both can play a role in 2025 portfolios.

Gold: The Classic Stock Hedge
Gold’s reputation as a “safe haven” remains intact. Historical data show that during equity sell-offs, investors flock to gold. Its long-term correlation with the S&P 500 hovers near zero, often turning negative during periods of market stress.

For instance, in 2022, gold gained roughly 5% while the S&P 500 fell nearly 20%. This illustrates why gold continues to protect portfolios during stock market turbulence.

Bitcoin: A Hedge Against Bond Market Stress
Bitcoin’s behavior differs. While it has struggled alongside equities in past sell-offs—falling over 60% in 2022 alongside tech stocks—its relationship with U.S. Treasuries is more compelling.

Studies suggest bitcoin shows low, sometimes negative, correlation with government bonds. During periods of rising yields or bond market pressure, BTC has occasionally held its value better than gold. Dragosch argues this makes bitcoin a potential counterweight when bonds wobble under rate hikes or fiscal concerns.

Divergent Performance in 2025
So far this year, the pattern holds. Gold is up more than 30% year-to-date, reflecting demand during equity volatility driven by tariffs, slower growth, and geopolitical risk. Bitcoin has gained about 16.5%, performing solidly even as 10-year U.S. Treasury yields fell roughly 7.3%.

By comparison, the S&P 500 is up around 10% in 2025. The divergence supports Dragosch’s rule-of-thumb: gold shines during stock market stress, while bitcoin may help hedge bond market exposure.

Why Both Assets Matter
Bitwise research underscores that holding both assets improves portfolio diversification and risk-adjusted returns. Gold remains reliable during stock market downturns, while bitcoin can capture upside during recoveries or bond market stress.

Caveats to the Strategy
Correlations aren’t fixed. Bitcoin’s growing institutional adoption via spot ETFs has made it behave more like a mainstream risk asset, reducing its “purity” as a bond hedge. Short-term shocks—regulatory surprises, liquidity squeezes, or macro volatility—can also move gold and bitcoin in tandem, limiting hedging effectiveness.

Dragosch’s conclusion is clear: gold is not obsolete. Investors don’t need to abandon it for bitcoin. Instead, understanding that the two assets hedge different risks—and strategically using both—may be the smartest approach in 2025.