2025 Hedging Showdown: Is Bitcoin or Gold the Safer Bet?

With crypto adoption rising and government support evolving, investors are reconsidering gold’s role as the default hedge. André Dragosch, European head of research at Bitwise Asset Management, argues that gold and bitcoin serve distinct hedging purposes—and both remain relevant in 2025 portfolios.

Gold Shields Stocks
Gold continues to act as a classic “safe haven” during equity sell-offs. Historically, its correlation with the S&P 500 hovers near zero and often turns negative in market stress. In 2022, for example, gold gained roughly 5% while the S&P 500 fell nearly 20%, demonstrating its ability to protect against stock market losses.

Bitcoin Counters Bond Market Stress
Bitcoin, in contrast, has struggled during equity downturns but shows a low, sometimes negative correlation with U.S. Treasuries. Rising yields or bond market turbulence can see bitcoin outperform gold, making it a potential counterbalance in portfolios exposed to fixed-income stress.

Performance Trends in 2025
Year-to-date, gold has surged more than 30%, reflecting safe-haven demand amid market volatility. Bitcoin has risen about 16.5%, holding its ground despite falling 10-year Treasury yields. Meanwhile, the S&P 500 is up roughly 10%. The divergence illustrates Dragosch’s key point: gold is the go-to hedge for stocks, while bitcoin may protect against bond-market pressures.

Strategic Takeaways
Bitwise research suggests holding both assets enhances diversification and risk-adjusted returns. Gold remains reliable during equity turbulence, and bitcoin provides a hedge against bond-market stress.

Cautions
Correlations aren’t fixed. Bitcoin’s rising institutional adoption, particularly through spot ETFs, has made it behave more like a mainstream risk asset. Short-term shocks—regulatory surprises, liquidity squeezes, or macro volatility—can move both assets in tandem, limiting hedging effectiveness.

Dragosch’s advice: gold is far from obsolete. Investors should recognize that the two assets hedge different risks, and using both strategically can optimize portfolios in 2025.