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Bitcoin Is Acting Like a Tech Stock, and That's a Problem for Hedgers

MarketDash Editorial Team
19 days ago
Bitcoin is moving in lockstep with AI stocks and the broader market, torpedoing its reputation as a portfolio hedge. Meanwhile, gold has quietly reclaimed its traditional safe-haven role, creating a striking divergence between two assets that were supposed to be cousins in the inflation-hedge trade.

Remember when Bitcoin (BTC) was supposed to be digital gold? That narrative is getting harder to defend. Bitcoin is increasingly acting like a souped-up tech stock, moving in near-perfect sync with AI equities and amplifying losses when markets get choppy.

Dennis DeBusschere, an analyst at 22V Research, points out that Bitcoin's correlation with the S&P 500 has hit one of its highest historical readings during the current equity pullback. The pattern becomes even more obvious when you look at volatility spikes. Bitcoin's negative correlation with the VIX—the market's fear gauge—tends to deepen when stress levels rise, cementing its profile as a risk-on asset rather than a risk-off refuge.

"Bitcoin has become more equity-like over the past five years, putting it into a more institutional friendly framework, but its tendency to trade with equity momentum when vol spikes reduces its potential as a hedge or a diversifier in a portfolio," DeBusschere wrote in an emailed note.

The connection has only tightened this year. Whenever financial conditions get tighter, Bitcoin stumbles right alongside AI names, speculative tech stocks, and the retail crowd's favorite trades. It's all moving together now.

Gold Breaks the Pattern

Here's where things get interesting. Gold had been acting strange earlier this year, trading like a momentum play during the September and October rally. That behavior was historically unusual and often preceded drawdowns. True to form, the metal rolled over in October.

But then gold did something Bitcoin didn't: it decoupled. While Bitcoin continued trading in tandem with AI stocks and retail favorites, gold went its own way. DeBusschere notes that gold's sensitivity to financial conditions has remained low, transforming it into a more effective hedge and better diversifier than Bitcoin in recent weeks.

Gold held steady while Bitcoin gapped lower, upending one of the dominant macro narratives of 2023 and 2024—the idea that gold and Bitcoin were kindred spirits in the inflation-hedge trade. They're not anymore.

The performance numbers tell the story. The SPDR Gold Shares (GLD) has climbed 54% year-to-date, while the iShares Bitcoin Trust ETF (IBIT) is down 9%.

Portfolio Implications

Bitcoin's rising correlation with equities means it magnifies risk precisely when you'd want protection. When markets turn volatile, Bitcoin doesn't cushion the blow—it compounds it.

Gold's recent divergence suggests it has reclaimed its traditional hedging credentials, while Bitcoin is trading more like a speculative momentum asset tethered to AI sentiment, retail enthusiasm, and liquidity cycles.

The practical takeaway is clear: Bitcoin's hedge credentials evaporate during volatility spikes, while gold's tend to strengthen. If you're building a portfolio that needs genuine diversification during market stress, these distinctions matter.

"Gold is back to being a more effective hedge/portfolio diversifier," DeBusschere said.

So much for digital gold.

Back to News

Bitcoin Is Acting Like a Tech Stock, and That's a Problem for Hedgers

MarketDash Editorial Team
19 days ago
Bitcoin is moving in lockstep with AI stocks and the broader market, torpedoing its reputation as a portfolio hedge. Meanwhile, gold has quietly reclaimed its traditional safe-haven role, creating a striking divergence between two assets that were supposed to be cousins in the inflation-hedge trade.

Remember when Bitcoin (BTC) was supposed to be digital gold? That narrative is getting harder to defend. Bitcoin is increasingly acting like a souped-up tech stock, moving in near-perfect sync with AI equities and amplifying losses when markets get choppy.

Dennis DeBusschere, an analyst at 22V Research, points out that Bitcoin's correlation with the S&P 500 has hit one of its highest historical readings during the current equity pullback. The pattern becomes even more obvious when you look at volatility spikes. Bitcoin's negative correlation with the VIX—the market's fear gauge—tends to deepen when stress levels rise, cementing its profile as a risk-on asset rather than a risk-off refuge.

"Bitcoin has become more equity-like over the past five years, putting it into a more institutional friendly framework, but its tendency to trade with equity momentum when vol spikes reduces its potential as a hedge or a diversifier in a portfolio," DeBusschere wrote in an emailed note.

The connection has only tightened this year. Whenever financial conditions get tighter, Bitcoin stumbles right alongside AI names, speculative tech stocks, and the retail crowd's favorite trades. It's all moving together now.

Gold Breaks the Pattern

Here's where things get interesting. Gold had been acting strange earlier this year, trading like a momentum play during the September and October rally. That behavior was historically unusual and often preceded drawdowns. True to form, the metal rolled over in October.

But then gold did something Bitcoin didn't: it decoupled. While Bitcoin continued trading in tandem with AI stocks and retail favorites, gold went its own way. DeBusschere notes that gold's sensitivity to financial conditions has remained low, transforming it into a more effective hedge and better diversifier than Bitcoin in recent weeks.

Gold held steady while Bitcoin gapped lower, upending one of the dominant macro narratives of 2023 and 2024—the idea that gold and Bitcoin were kindred spirits in the inflation-hedge trade. They're not anymore.

The performance numbers tell the story. The SPDR Gold Shares (GLD) has climbed 54% year-to-date, while the iShares Bitcoin Trust ETF (IBIT) is down 9%.

Portfolio Implications

Bitcoin's rising correlation with equities means it magnifies risk precisely when you'd want protection. When markets turn volatile, Bitcoin doesn't cushion the blow—it compounds it.

Gold's recent divergence suggests it has reclaimed its traditional hedging credentials, while Bitcoin is trading more like a speculative momentum asset tethered to AI sentiment, retail enthusiasm, and liquidity cycles.

The practical takeaway is clear: Bitcoin's hedge credentials evaporate during volatility spikes, while gold's tend to strengthen. If you're building a portfolio that needs genuine diversification during market stress, these distinctions matter.

"Gold is back to being a more effective hedge/portfolio diversifier," DeBusschere said.

So much for digital gold.