Bitcoin’s slide below $110K shows it still trades like a risk asset. Gold’s record surge and ETF divergence make clear which store of value markets trust when panic hits.
Bitcoin’s Role as Portfolio Hedge in Doubt After Historic Crash
Bitcoin’s reputation as “digital gold” took a major hit this week. After one of the sharpest selloffs in crypto history, the world’s largest digital asset dropped below $110,000 for the first time since February, and briefly touched $102,000 as $19 billion in leveraged bets were wiped out in a single day.
The crash followed President Trump’s announcement of 100% tariffs on Chinese imports, which sent shockwaves through global markets. Gold surged past $4,200 an ounce, a new record, while Bitcoin fell in tandem with equities, suggesting it remains tethered to broader risk sentiment rather than acting as a hedge.
Why It Matters
The breakdown exposes a hard truth for institutional investors: Bitcoin still trades like a high-beta tech stock, not a defensive asset. BlackRock’s iShares Bitcoin Trust (IBIT) stalled at $91 billion in assets, while SPDR Gold Shares (GLD) climbed to $136 billion, widening the gap in favor of traditional safe havens.
Market strategist Michael O’Rourke of Jonestrading summed it up bluntly: “Bitcoin has always been a speculative risk asset, not a safe haven.” Meanwhile, the Sharpe ratio for gold has climbed to 3, its highest in a year, while Bitcoin’s fell to 1.9.
Reader Lens
The comparison isn’t just symbolic. For much of 2025, Bitcoin and gold were seen as competing hedges for inflation and geopolitical volatility. Now, as Ed Yardeni of Yardeni Research put it, “Gold is the new Bitcoin.” Gold is up 60% this year, compared to Bitcoin’s 20%, and its performance during this crisis has re-established it as the ultimate flight-to-safety trade.
For Bitcoin advocates, the takeaway is sobering: ETF inflows and institutional participation can’t yet change market reflexes. As long as Bitcoin’s liquidity depends on leverage and risk appetite, its role as a macro hedge will remain aspirational, not functional.
