Bitwise's André Dragosch highlights the distinct roles of gold and bitcoin as hedging assets in 2025 portfolios. Gold, he argues, remains the superior hedge against equity market downturns, while bitcoin increasingly acts as a buffer against bond market stress. This year's performance supports this thesis: gold is up over 30%, driven by equity volatility, while bitcoin's approximately 16% gain correlates with declining Treasury yields.
The S&P 500's roughly 10% increase further emphasizes this divergence. While increased institutional investment in bitcoin via spot ETFs has strengthened its correlation with equities, reducing its effectiveness as a pure bond hedge, the research suggests that a diversified portfolio including both assets optimizes risk-adjusted returns. However, unexpected regulatory changes or market shocks could temporarily disrupt this relationship.
The Trump administration's pro-crypto stance adds another layer of complexity, but Dragosch maintains that both assets offer distinct hedging benefits and shouldn't be viewed as mutually exclusive.
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