Overview
An analysis by Bitwise Asset Management’s André Dragosch examines gold and bitcoin as inflation hedges in 2025. Gold has served traditionally as an equity safe-haven, rising when stock markets tumble, while bitcoin has shown stronger performance during periods of rising U.S. Treasury yields and bond market volatility. Dragosch’s research underscores that these assets hedge different risks, making combined exposure potentially optimal for diversification.
Gold’s Equity Hedge Role
Historical data indicate that gold’s correlation with the S&P 500 has hovered near zero and often turns negative in market stress. For instance, during the 2022 equity downturn, gold prices rose approximately 5% even as the S&P 500 dropped nearly 20%. This resilience stems from gold’s status as a non-yielding asset with intrinsic store-of-value properties that attract investors seeking protection from equity drawdowns.
Bitcoin’s Bond-Market Counterweight
By contrast, bitcoin has occasionally diverged from equity sell-offs but demonstrated lower or slightly negative correlation with U.S. Treasuries. Studies from multiple institutions reveal that when bond prices fall and yields climb, bitcoin has sometimes held up better than gold. In 2023, amid fears over U.S. debt sustainability and rising deficits, bitcoin outperformed gold as bond markets sold off.
2025 Performance Split
As of August 31, 2025, gold is up over 30% year-to-date while bitcoin has gained nearly 16.5%, despite 10-year Treasury yields rising by more than 7%. These divergent returns illustrate how gold has benefited from bouts of equity volatility, whereas bitcoin has provided counterbalance during bond market stress. This performance split supports Dragosch’s rule-of-thumb for portfolio hedging.
Caveats and Considerations
Correlations are not static. Bitcoin’s ties to equities have strengthened in 2025 due to large institutional inflows into spot ETFs, which can reduce its idiosyncratic hedge properties. Short-term shocks such as regulatory announcements, central bank decisions, or liquidity squeezes may drive gold and bitcoin in the same direction, limiting hedge effectiveness.
Conclusion
Dragosch concludes that neither asset should be fully abandoned. Gold remains the primary hedge against equity drawdowns, while bitcoin can serve as a counterweight to bond market stress. Holding both may enhance risk-adjusted returns by covering a broader spectrum of market scenarios.
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