Which Is the Better Hedge Asset in 2025?

The debate between gold and bitcoin as the ultimate hedge asset has been a hot topic, especially with the Trump administration’s vocal support for cryptocurrencies. Many investors are wondering if gold’s status as the go-to safe haven asset is being challenged by the rise of bitcoin.

André Dragosch, European head of research at Bitwise Asset Management, weighs in on the discussion. He argues that the choice between gold and bitcoin is not a simple one. In a recent post on X, Dragosch suggests that gold still serves as the best protection against stock market losses, while bitcoin is increasingly acting as a counterweight to bond market stress.

Gold has a long history of being the preferred hedge asset during times of equity market turmoil. When stocks plummet, investors often flock to gold, as its correlation with the S&P 500 tends to be near zero or even negative during market stress. For example, during the 2022 bear market, gold prices rose by about 5% while the S&P 500 dropped nearly 20%, showcasing gold’s role as a classic safe haven asset.

On the other hand, bitcoin has shown a different relationship with the market. While it may struggle during equity panics, its correlation with U.S. Treasuries has been intriguing. Studies have shown that bitcoin has a low or slightly negative correlation with government bonds. This means that when bond prices fall and yields rise, as seen in 2023 during concerns over U.S. debt and deficits, bitcoin has sometimes outperformed gold.

In 2025, the performance of gold and bitcoin has further highlighted their distinct roles. Gold has surged by over 30% year-to-date, benefiting from equity market volatility driven by factors such as tariffs, slowing growth, and political risks. On the other hand, bitcoin has gained about 16.46% this year, a solid performance considering the decline in 10-year U.S. Treasury yields.

Despite the tempting proposition of ditching gold for bitcoin, Dragosch advises against it. He emphasizes that both assets play different roles in a portfolio. Gold remains the better hedge during stock market downturns, while bitcoin may provide protection when bond markets face pressure from rising rates and fiscal concerns.

While correlations between assets are not static and external factors can impact their performance, Dragosch’s rule-of-thumb still holds true. Holding both gold and bitcoin can improve diversification and optimize risk-adjusted returns.

In conclusion, the debate between gold and bitcoin as the ultimate hedge asset continues. While Trump’s support for crypto may sway some investors towards bitcoin, Dragosch’s insights remind us that both assets have their place in a well-balanced portfolio. Understanding their unique roles in hedging against different risks is key to making informed investment decisions. The world of technology is constantly evolving, with new innovations and advancements being made every day. One of the most exciting developments in recent years is the rise of artificial intelligence (AI). AI is a branch of computer science that aims to create machines that can perform tasks that typically require human intelligence, such as speech recognition, decision-making, and language translation.

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