As cryptocurrency adoption grows and regulatory sentiment evolves, investors are reconsidering the traditional role of gold as a hedge. André Dragosch, European head of research at Bitwise Asset Management, emphasizes that gold and bitcoin serve different purposes in 2025 portfolios.
Gold Protects Against Stock Volatility
Gold remains the classic safe-haven asset. Historical data shows its correlation with the S&P 500 is near zero, often turning negative during market stress. During the 2022 equity downturn, for example, gold gained roughly 5% while the S&P 500 dropped nearly 20%, highlighting its effectiveness as a hedge against stock market losses.
Bitcoin as a Bond-Market Counterweight
Bitcoin, while less effective during equity panics, exhibits a low or slightly negative correlation with U.S. Treasuries. This characteristic allows it to potentially outperform during periods of rising yields or bond-market stress, offering investors a unique hedging tool alongside traditional assets.
Performance in 2025
So far this year, gold has risen over 30%, reflecting safe-haven demand amid equity volatility. Bitcoin has gained roughly 16.5%, holding firm despite declining 10-year Treasury yields. By comparison, the S&P 500 is up about 10% year-to-date. These trends reinforce Dragosch’s insight: gold remains best for stock-market protection, while bitcoin can counter bond-market pressures.
Portfolio Implications
Bitwise research underscores that holding both assets enhances diversification and risk-adjusted returns. Gold hedges equities, bitcoin hedges bonds—investors don’t need to choose one over the other.
Caveats
Correlations can shift. Bitcoin’s rising adoption through spot ETFs has increased its sensitivity to broader market movements, potentially reducing its effectiveness as a pure bond hedge. Short-term shocks—regulatory news, liquidity events, or macroeconomic surprises—may also move both assets in the same direction.
Dragosch concludes that gold is far from obsolete. The smarter approach is to recognize each asset’s distinct risk-hedging function and leverage both strategically in 2025.
