Trade War and Bitcoin’s Status as Safe-Haven Asset

The escalating global trade war, led by the United States, has challenged Bitcoin's long-standing narrative as a safe-haven asset. Traditionally, safe-haven assets like gold are expected to retain or increase their value during economic stress. However, recent market dynamics suggest Bitcoin may no longer fit this category.

Since January 2025, Bitcoin has dropped by 10%, contrasting sharply with gold’s 10% rise during the same period. This divergence highlights Bitcoin’s increasing correlation with risk assets like equities rather than behaving as a hedge during geopolitical turmoil.

For instance, gold surged to $2,917 per ounce as investors sought stability amid tariff wars and recession fears. Bitcoin mirrored equity markets, suffering alongside them—a trend inconsistent with its supposed "safe-haven" status.

The launch of Bitcoin ETFs has widened institutional ownership but also increased Bitcoin's correlation with traditional equity markets. This shift undermines its appeal as a diversification tool and safe haven.

Bitcoin’s price swings remain extreme compared to gold’s stability, further deterring conservative investors during crises.

Experts argue that Bitcoin operates as both a short-term risk asset and a long-term store of value. Sensitive to liquidity expectations and overall sentiment, making it vulnerable during geopolitical events like trade wars. Over four-year periods, Bitcoin has consistently outperformed gold and equities, retaining its role as a hedge against inflation and fiat currency devaluation.

While Bitcoin retains its utility as a long-term store of value, its short-term volatility and increasing correlation with equities have eroded its safe-haven status. In contrast, gold remains the preferred asset for geopolitical stability, reinforcing its dominance in times of economic uncertainty.

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