As gold surges above 30% gains and Bitcoin climbs 15% year-to-date, Bitwise senior strategist André Dragosch presented a new heuristic for portfolio hedging. In a recent analysis, Dragosch noted that gold historically outperforms during equity market sell-offs, while Bitcoin has shown stronger resilience when Treasury yields rise and bond stresses emerge.
Using a decade of price data, Dragosch highlighted divergent hedging roles: gold’s inverse correlation with the S&P 500 during drawdowns contrasts with Bitcoin’s tendency to hold value or appreciate amid rising real yields and bond market volatility. He cited the post-halving momentum of Bitcoin and central bank policy risks under President Trump’s administration as factors enhancing Bitcoin’s store-of-value narrative.
Key observations included gold’s 9% average return during 15 significant equity drawdowns since 2015, versus Bitcoin’s 12% average during 10 distinct bond stress episodes in the same period. Dragosch warned that replacing gold entirely with Bitcoin ignores the complementary nature of these assets, recommending a split to optimize risk mitigation across market environments.
Considerations
- Gold: Strong during equity market turmoil; less effective against rising rates.
- Bitcoin: Performs well amid bond market sell-offs; vulnerable in broad risk-off events.
Dragosch concluded that while Bitcoin’s narrative strengthens under favorable crypto regulation and institutional adoption, investors should calibrate hedge allocations dynamically across gold and Bitcoin based on evolving macro conditions.
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