Bitcoin outperforms during systemic macro shocks: Studies indicate that Bitcoin often delivers higher risk-adjusted returns during periods of financial market turbulence, such as banking crises or geopolitical escalations, compared to traditional assets like stocks or bonds. This outperformance has been especially noted during episodes of market-wide liquidity stress, as also evident recently during U.S. tariff tensions.
Historical data indicates lower volatility in Bitcoin versus equities during tariff shocks: During the 2018–2019 US–China trade war, equities fell sharply while Bitcoin remained relatively stable, suggesting its potential as an uncorrelated asset during trade-driven stress. A similar phenomena has materialised already in the latest trade war 2.0., and again at times of heightened economic policy uncertainty. However, this breaks down in crypto-linked crises like FTX 2022 and SVB 2023, where Bitcoin’s safe-haven appeal weakened due to its ties to the digital asset ecosystem.
Correlation characteristics: Co-movements of Bitcoin and traditional risks assets like S&P 500 and Nasdaq have intensified since the introduction of Bitcoin ETFs back in January 2024. This is also associated with significant inflows into Bitcoin ETFs and institutional investors hedging. However, Bitcoin has to a certain degree decoupled from such strong correlation characteristics during the current period of trade tariff tensions.
Bitcoin’s store-of-value appeal positions it as "digital gold" during economic uncertainty: Due to its finite supply and decentralised issuance, Bitcoin is increasingly viewed by investors as a modern parallel to gold — particularly appealing during periods of monetary debasement, sovereign debt concerns, or distrust in fiat systems. The latter has become apparent during the current period of tariff tensions.
Bitcoin Strategic Reserves: A growing number of corporations and U.S. states are already adopting Bitcoin as part of their strategic reserves, with more governments likely to follow suit. This is especially likely as the U.S. leads with plans for a Strategic Bitcoin Reserve, the impact of which remains underestimated, particularly through future U.S. government budget neutral purchases. This reinforces Bitcoin as a store of value, similar to gold and the prospect of partial Bitcoinisation, similar to dollarisation, where Bitcoin could be used alongside fiat currencies in an official capacity.
Decentralised structure renders Bitcoin more resilient to tariff policies: Unlike companies, countries and traditional assets, e.g., equities, government bonds and fiat currencies, affected by import duties or cross-border trade barriers, Bitcoin’s decentralised and borderless nature insulates it from direct exposure to tariff-driven disruptions in the global economy, setting it apart from traditional risk assets.
Hedging against inflation and fiat depreciation bolsters Bitcoin’s safe-haven status: Bitcoin has gained traction as a macro hedge in environments of sustained inflation and/or over fiat currency debasement. The U.S. tariffs are inflationary, raises risks of a recession and undermine the hegemony of the US dollar.
A distinct feature in 2024 was increased correlation of Bitcoin and traditional risk assets such as S&P 500 and the Nasdaq. This trend signified a shift in Bitcoin's role within the investment landscape, transitioning from a speculative and uncorrelated asset to one more integrated with conventional financial instruments. The intensifying correlation between Bitcoin and traditional financial assets, such as the S&P 500 and Nasdaq Composite, has become increasingly evident, particularly in the context of heightened institutional involvement through Bitcoin ETFs and hedging strategies. ETFs have provided institutional investors with regulated and accessible means to gain exposure to Bitcoin and have amassed over $108.5bn in assets so far. This phenomenon has been extensively analysed by Tagus Capital (e.g., Tagus Bytes: Jan. 15, 2025). The convergence of Bitcoin with conventional risk assets underscores a significant shift in its market behaviour, reflecting its growing integration into mainstream financial systems.
Yet Bitcoin’s fundamental characteristics as a form of “digital gold” remain evident, particularly during periods of acute financial stress. This has been again demonstrated so far 2025, during the announcement of escalating punitive U.S. tariffs on April, 2, 2025, prompting heightened volatility across global markets. In this climate of uncertainty, Bitcoin has exhibited relative resilience vs U.S. equities, reinforcing its perception as a store of value. A similar phenomenon occurred during the U.S. trade war 1.0 (2018-2019) and again demonstrated so far during U.S. trade war 2.0 (2025-). The U.S. Treasury’s formal recognition of Bitcoin as “digital gold” further affirms this status within the decentralised finance landscape.
Bitcoin’s capacity to behave like a risk asset during stable periods, while functioning as a safe haven in times of market turbulence, underscores its evolving position in the financial system. This behavioural duality reflects the interplay between institutional adoption and its origins as a decentralised, non-sovereign store of value. As such, Bitcoin challenges conventional asset classifications and supports its inclusion in a diversified portfolio alongside traditional financial instruments.
Transitional Behaviour of Bitcoin:Empirical studies have highlighted an evolving relationship of Bitcoin to that of traditional risk assets. Initial analysis for example by Alvarez-Ramirez et al. (2018), employed detrended fluctuation analysis over sliding windows to assess Bitcoin's market efficiency from June 2013 to June 2017. Their findings revealed alternating periods of efficiency and anti-persistence in Bitcoin's returns, indicating significant asymmetry in price dynamics over time. Notably, the market exhibited anti-persistent behaviour during upward price trends, suggesting that Bitcoin's efficiency is not constant but varies with market conditions. These irregular patterns underscored Bitcoin’s speculative nature and its historically low correlation with mainstream financial assets.
The introduction of Bitcoin ETFs in January 2024 has altered this relationship. For instance, Wu (2025) conducted research revealing that Bitcoin's correlation with major U.S. equity indices intensified in 2024. Indeed, analysis by Tagus Capital reiterates similar 60-day rolling correlation rapidly increasing in H2 2024 with peaks of correlation coefficients of 0.88 and 0.91 for Bitcoin vs the Nasdaq-100 and S&P 500, respectively. This heightened correlation suggests that Bitcoin's price movements have become increasingly aligned with those of traditional equities. Several factors contributed to this convergence. A significant driver has been the rapid and significant institutional adoption of Bitcoin, facilitated by the introduction and unprecedented rapid growth of Bitcoin ETFs. These financial instruments provide institutional investors with regulated and accessible means to gain exposure to Bitcoin. The influx of institutional capital into Bitcoin ETFs not only increased the asset's market capitalisation but also influenced its trading dynamics. As institutional investors often employ strategies similar to those used in traditional equity markets, their participation contributed to Bitcoin's price behaviour mirroring that of established risk assets. This phenomenon underscores the asset's evolving nature and its susceptibility to broader market sentiments
Bitcoin Correlation vs US Equities Intensified in H2 2024
Recent Bitcoin Resilience Reiterates Distinct Characteristics: Bitcoin’s recent rise to a six-week high reflects a broader pattern seen during periods of significant economic, political, and monetary uncertainty in the United States. Whilst there has been some relief very recently, this does not mask the broader decline in equity markets, heightened trade tensions, a weakening U.S. dollar, and increasing political pressure, temporarily at least, on the Federal Reserve. In this context, investors appear to have been seeking refuge in alternative assets such as Bitcoin. Initially, Bitcoin came under pressure from institutional investors rebalancing ETF positions. However, demand later broadened, resembling the behaviour of gold. As the crisis intensified, particularly on April 2, 2025, when the U.S. announced universal tariffs of 10% and up to 50% for certain countries, Bitcoin began to decouple from equities. Historically, such environments characterised by declining confidence in traditional monetary policy and elevated geopolitical risk have prompted capital to flow into decentralised digital assets like Bitcoin, and this time the institutional inflows have been arguably even more pronounced (see below). The current climate continues to reinforce Bitcoin’s emerging role as a distinct asset class that often behaves counter to traditional risk assets and fiat currencies during periods of systemic stress and policy unpredictability.
Distinct Period Bitcoin Gained as S&P500 Fell, USD Weakened & US10Y Yields Rose
Resilient Bitcoin During Trade War 1.0: During the U.S.–China trade war of 2018–2019, often referred to as Trade War 1.0, Bitcoin displayed early signs of its potential as a resilient asset amid geopolitical tensions. While traditional markets reacted sharply to tariff escalations and economic uncertainty, Bitcoin remained relatively uncorrelated, with notable price increases during periods of heightened trade dispute headlines (Wu et al., 2019). Although still largely viewed as a speculative asset at the time, Bitcoin’s decentralised nature and independence from national monetary systems allowed it to act, in part, as a hedge against macroeconomic risk (Baur, Hong & Lee, 2018; Dyhrberg, 2016). These characteristics foreshadowed its evolving role in later periods of global stress and the break-out of the latest Trade War 2.0, which intensified as of April 2, 2025.
During both the 2022 FTX collapse and the 2023 Silicon Valley Bank (SVB) crisis, Bitcoin’s viability as a "safe haven" asset came under scrutiny. Despite Bitcoin’s reputation as a decentralised and inflation-resistant store of value, its performance during these crises was disappointing, as it failed to decouple from the broader traditional market downturns. The FTX crisis, which saw one of the largest crypto exchanges implode amid allegations of fraud and mismanagement, led to a sharp decline in the value of Bitcoin and other cryptocurrencies, underscoring the inherent volatility and speculative nature of the digital asset space (Khan et al., 2025). Similarly, the collapse of Silicon Valley Bank (SVB) in March 2023, a key player in the U.S. banking sector that primarily catered to tech startups and digital asset banking, sent shockwaves through both traditional financial markets, the tech sector and stablecoins. The stablecoin, USDC, temporarily de-pegged on March 11, 2023, after $3.3 billion of its reserves were trapped in the collapsed SVB, causing investor panic. While Bitcoin was expected by some to serve as a hedge against systemic risk, it showed a high correlation with U.S. equities during this period. The S&P 500, for instance, experienced significant volatility as investors reacted to fears of a broader banking contagion and its impact on venture capital funding (Galati and Capalbo, 2024). Bitcoin’s price also dropped alongside U.S. equities, demonstrating that during certain periods of financial instability, it behaved more like a risk asset than a safe haven. This continued correlation with traditional assets during times of crisis reinforces the view that Bitcoin's role as a safe haven can be undermined when the crisis also directly impacts the broader digital asset landscape.
Bitcoin Safe-Haven Status Falters During FTX and SVB Crises
Source: Tagus Capital, YahooFinance.
Bitcoin’s safe-haven appeal faltered during both the FTX and SVB crises, highlighting how its performance is shaped by the crisis’s connection to the digital asset ecosystem. But the distinction this time around is that the sharp global market volatility is driven by macro trade tensions and economic policy uncertainty rather than being digital asset centric, and therefore Bitcoin is in a better position to serve as a hedge as its detachment from traditional monetary systems becomes more relevant amid fiat instability and geopolitical stress.
Subdued Bitcoin Volatility Versus Equities: Bitcoin implied volatility, as measured by the DVOL index, has recently remained notably subdued. DVOL tracks expected price fluctuations in Bitcoin over a 30-day period and offers insights into market sentiment. In contrast, the S&P 500’s VIX, which gauges 30-day implied volatility of the U.S. stock market, has been much more elevated, reaching crisis thresholds. In the days after April 2, 2025, the announcement of punitive tariffs by the United States on imports from numerous countries, especially China, triggered a sharp rise in equity market volatility, with the VIX spiking above 50. This level had not been seen since the early stages of the pandemic in 2020 and the Global Financial Crisis in 2008. This divergence between DVOL and VIX is partly attributed to stabilising institutional demand via spot Bitcoin ETFs, a maturing crypto market structure, and Bitcoin’s appeal as an alternative asset amid fiat currency and policy uncertainty.
Bitcoin Volatility (DVOL) More Subdued Than S&P 500 (VIX)
Source: Tagus Capital, TradingView.
Institutional Investor Inflows and Hedging via Bitcoin ETFs: Bitcoin appears to have benefited not only from sentiment as a decentralised digital asset during periods of macroeconomic and political instability, which have seen volatility in traditional risk assets, rising Treasury yields, and a weaker US dollar, but also from renewed institutional interest. Recently, daily inflow of $913mn into US spot Bitcoin ETFs was registered on April 22, 2025, the top sixth inflow since the launch of ETFs and the largest since January 17, 2025, just ahead of President Donald Trump's inauguration, a period also marked by heightened optimism around potentially crypto friendly policies.
Largest Bitcoin ETF Inflows Since Jan. 2025
Source: Tagus Capital
Bitcoin as a Resilient Safe-Haven Amid Tariff Turmoil 2.0: During the heightened global market volatility triggered by the punitive tariff announcements by the U.S. government on April 2, 2025, Bitcoin demonstrated notable resilience compared to traditional risk assets. While equity markets slumped and investor sentiment soured, gold rallied to a new all-time high, reaffirming its role as a classic safe haven. Bitcoin has shown similar characteristics, with its price holding firm and even edging higher amid the turmoil. This behaviour suggests that Bitcoin is increasingly perceived not just as a speculative asset, but as a digital store of value. Its limited supply, decentralised nature, and lack of direct exposure to trade or monetary policy interventions may have contributed to its stability during the tariff-induced uncertainty. In contrast to fiat currencies, equities and government bonds that are often directly affected by geopolitical and economic policies, Bitcoin's independence makes it an attractive hedge in times of global financial stress.
Bitcoin Exhibits Safe-Haven Characteristics Similar to Gold
Bitcoin Reserves and ‘Bitcoinisation’ Reinforces Safe-Haven Status: On March 6, 2025, U.S. President Donald Trump signed an executive order establishing the Strategic Bitcoin Reserve (SBR) and the Digital Asset Stockpile (DAS), marking a significant moment for the government's recognition of cryptocurrencies (The White House, 2025). While the market impact was initially muted due to the absence of immediate large-scale Bitcoin purchases, the creation of the SBR officially recognises Bitcoin as a strategic asset held by the U.S. government, similar to gold reserves. This move signals the potential in long-term demand and is likely to accelerate the trend of nation-states accumulating Bitcoin reserves and reinforce Bitcoin’s safe-haven status at time of crises.
Much of the focus is how much the U.S. will store and accumulate Bitcoin and other digital assets. There are plenty of avenues for the U.S. government to conduct budget-neutral purchases such as revaluing gold certificates or selling Special Drawing Rights. While widespread adoption is still nascent, several nations and institutions are exploring the potential of Bitcoin reserves. The prospective adoption of a national Bitcoin reserve by the United States is likely to see an acceleration in other countries following suit and could even potentially lead major central banks to complement or even substitute gold reserves with digital assets. The implications are likely to extend beyond market supply constraints to a significant "Bitcoinisation" of the dollar. This would resemble Dollarisation, where countries adopt the U.S. dollar alongside or instead of their own currency (Tagus Bytes: Nov. 25, 2024; (Tagus Bits 'n Bobs Issue 8: Risks and Returns for 2025).
Corporations, both public and private, are increasingly incorporating Bitcoin into their strategic reserves, with ownership already nearing 5% of the total supply compared to approximately 7.5% held by governments and continuing to grow rapidly. This also reinforces the safe-haven characteristics of Bitcoin. However, as with the earlier analysis by Tagus Capital, the situation is becoming increasingly multifaceted and offers scope for further research, particularly as some technology companies are including Bitcoin in their treasury reserves. This adds a new layer of complexity to the relationship between equity markets and Bitcoin. On one hand, Bitcoin is being treated as a form of digital gold reserves. On the other, this trend deepens the correlation between Bitcoin’s value and the share prices of the technology firms that hold it.
References
Alvarez-Ramirez, J., Rodríguez, E., and Ibarra-Valdez, C., 2018. Long-range correlations and asymmetry in the Bitcoin market. Physica A: Statistical Mechanics and its Applications, 492, pp.948–955.
Baur, D.G., Hong, K. and Lee, A.D. (2018). Bitcoin: Medium of exchange or speculative assets? Journal of International Financial Markets, Institutions and Money, 54, pp.177–189.
Dyhrberg, A.H. (2016). Bitcoin, gold and the dollar – A GARCH volatility analysis. Finance Research Letters, 16, pp.85–92.
Galati, L. and Capalbo, F., 2024. Silicon Valley Bank bankruptcy and Stablecoins stability. International Review of Financial Analysis, 91(C).
Khan, K., Khurshid, A. and Cifuentes-Faura, J., 2025. Causal estimation of FTX collapse on cryptocurrency: a counterfactual prediction analysis. Financial Innovation, 11(16).
Wu, S., Tong, M., Yang, Z., and Derbali, A. (2019). Does gold or Bitcoin hedge economic policy uncertainty? Finance Research Letters, 31, pp.171–178.
