The Trump administration’s embrace of cryptocurrency has sparked debate among investors about whether to shift entirely from gold to Bitcoin as a preferred hedge asset. André Dragosch, the European head of research at Bitwise Asset Management, offers a nuanced perspective. On a recent post on X, he suggested that the choice between gold and Bitcoin isn’t cut-and-dry. Gold remains the go-to for protection against stock market slumps, while Bitcoin is emerging as a counterbalance to bond market turmoil.
Gold: Equity’s Safe Harbor
Historically, gold has been the refuge investors seek when equities falter. Its long-standing near-zero correlation with the S&P 500 is well-documented, often turning negative during tumultuous times. In the 2022 bear market, while the S&P 500 nosedived nearly 20%, gold prices took a 5% ascent. This behavior underpins gold’s status as the quintessential “safe haven.”
Bitcoin: The Bond Market’s Foil
In sharp contrast, Bitcoin has generally stumbled during equity sell-offs, evidenced by its 60% plunge in 2022 alongside tech stocks. Yet, its dynamics with U.S. Treasuries present a different story. Studies highlight Bitcoin’s low or slightly negative correlation with government bonds, suggesting it sometimes holds its own when bond yields rise—like during the 2023 fiscal fears. For Dragosch, this indicates a diverse role: gold shields against stock volatility, while Bitcoin may offer solace during bond market distress. This perspective aligns with recent discussions on how Bitcoin is undervalued versus gold as volatility collapses, according to JPMorgan.
How the Rule Holds in 2025
This year offers a compelling snapshot. Gold, as per the World Gold Council, has shot up over 30% by August 31, driven by demand amid equity volatility linked to tariffs, slowing growth, and political unrest. Bitcoin’s performance, while more modest, is noteworthy. CoinDesk data shows a 16.46% gain, even as 10-year U.S. Treasury yields have dropped around 7.33%, according to MarketWatch. The S&P 500, meanwhile, has risen roughly 10%, reports CNBC. The distinct performances of these assets highlight Dragosch’s insight: gold thrives on equity jitters, whereas Bitcoin holds steady against bond market upheavals. This trend is being closely watched by traders, especially with Nvidia earnings looming large, as they eye correlations with Bitcoin.
Not Just Opinion: Data Backs It
This isn’t merely Dragosch’s conjecture. A Bitwise report earlier this year underscored gold’s resilience during stock downturns. It noted Bitcoin’s stronger returns in recoveries and its lower correlation with U.S. Treasuries. The report suggests that holding both assets can enhance diversification and optimize risk-adjusted returns.
The Caveats
However, these correlations aren’t fixed. In 2025, Bitcoin’s links to equities have grown stronger due to significant inflows into spot ETFs, drawing billions from institutional investors. This influx makes Bitcoin trade more like a mainstream risk asset, somewhat diminishing its effectiveness as a bond hedge. Additionally, short-term shocks—like regulatory changes or liquidity issues—can affect both gold and Bitcoin similarly, reducing their hedging benefits. Thus, Dragosch’s guideline serves as a heuristic, not a foolproof strategy.
The Bottom Line
Trump’s pro-crypto stance poses an intriguing dilemma: should investors abandon gold for Bitcoin? Dragosch, supported by historical data, advises against such a drastic move. Gold remains unmatched when stocks take a hit, while Bitcoin could provide refuge during bond pressures. The takeaway for investors isn’t about choosing one over the other; it’s about understanding their distinct roles and leveraging both to hedge different risks.
Source
This article is based on: Given Trump’s Pro-Crypto Stance, Is it Time to Fully Ditch Gold in Favor of Bitcoin?
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
