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Many people refer to Bitcoin as "digital gold"—a supposed safe haven for investors against inflation and global economic uncertainty.
The weeks following the U.S.-China tariff announcement, which put stock markets under pressure, were largely characterized by such sentiment.
While Bitcoin did see significant price drops, the asset quickly reached back up. Many financial analysts also noted Bitcoin has been decoupling from traditional stocks like the S&P 500 and Nasdaq.
However, new data from RedStone has found that Bitcoin might not be the hedge against inflation. RedStone tracked how closely Bitcoin moved in sync with the S&P 500, the main index for the U.S. stock market. They determined that in the past year, the correlation between the two has ranged from -0.2 to 0.4.
Bitcoin’s movement
In other words, sometimes Bitcoin’s movement is erratic, sometimes it moves in the same direction, and sometimes it moves independently of the S&P 500.
“Bitcoin's correlation with equities (-0.2 to 0.4) shows significantly more variability than traditional safe havens. Gold typically maintains a more consistent negative correlation with the S&P 500 (-0.3 to -0.5), while high-quality bonds demonstrate stronger counter-cyclical properties during market stress,"
said Marcin Kamierczak, the COO of RedStone, a blockchain oracle tool.
To qualify as a hedge, assets like gold or U.S. Treasurys typically need to have a strong negative correlation with stocks, but Bitcoin has not achieved that yet.
“Bitcoin's inconsistent correlation disqualifies it as a true "macro hedge," which requires reliable counter-movement. It's more accurately described as a portfolio diversifier with asymmetric return potential rather than a dependable protective asset,” added Marcin.
Other data backs up
Incidentally, Coin Metrics’ most recent State of the Network report also mentions that while Bitcoin has exhibited low correlations with both the S&P 500 and gold of late, it is short-lived.
The report also stresses that Bitcoin has remained sensitive to broader trends such as interest rates and risk sentiment, and there is very little proof to suggest it is now a safe-haven asset.
At press time, Bitcoin is trading at $$99,466.49, as per Kraken's price feed, up by over 2.74% in the last 24 hours.