Bitcoin falls as Tariffs hit

BTC yet to supplant Gold as the leading hedge against risk

Alex Speedie

April 15, 2025

A big reason for Bitcoin becoming more established has been its perceived ability to act as a hedge against inflation. Historically the asset class that has done this best has been gold. For context, a kilogram of gold today buys roughly the same amount of land as it did hundreds of years ago. Very few assets can claim that kind of track record. Nonetheless, as Bitcoin has increased in popularity, it has also been helpful with hedging inflation due to the following factors:

Limited Supply: Bitcoin’s monetary policy enforces scarcity. Bitcoin, unlike fiat currencies which can be printed endlessly, has a fixed supply of 21 million enforced by code and consensus, giving it inflation resistant scarcity similar to gold but with added advantages like portability, verifiability, and confiscation resistance.

Decentralisation: Bitcoin operates independently of governments and central banks, preventing any single entity from manipulating its supply or freezing transactions.

Global Store Of Value: Crypto’s borderless nature enables it to serve as a global store of value, where it can move seamlessly globally through the internet without constraint, making it a strong hedge against monetary debasement and currency devaluation.

Crypto Dominance: Whilst there is no limit to the number of crypto currencies now in the market, Bitcoin has now established itself as the dominant solution, which means that for anyone interested in investing into Crypto, Bitcoin is the least volatile and best capitalised.

It is for these reasons, there has been increased institutional adoption. With the approval of Bitcoin ETFs and firms like BlackRock, Fidelity, and BNY Mellon integrating Bitcoin into their offerings, institutional participation has surged.

‍

While Bitcoin has increasingly positioned itself as a contender to gold in the role of an inflation hedge, recent market behaviour suggests it has yet to match gold’s established reputation as a safe haven asset during periods of volatility and economic uncertainty.

‍

To illustrate: on January 1, gold opened at $2,592 per ounce. By April 1, ahead of the announcement on tariffs, it had risen to $3,143. Within 24 hours of the announcement, it climbed further to $3,161 and has since appreciated to $3,225, even after a subsequent policy revision. By comparison, Bitcoin began the year at $94,560. Leading up to April 1, it declined to $85,164, then dropped further to $76,312 in response to the tariff announcement, before recovering slightly to $84,332, still below its starting point for the year.

‍

These movements underscore a key point: while Bitcoin continues to gain traction, this period has clearly demonstrated that it has not yet supplanted gold as the primary store of value in times of heightened market risk. This raises a compelling question: why has Bitcoin not yet been broadly embraced as a reliable risk-off investment class, despite sharing many of gold’s underlying fundamentals?

‍

Part of the answer, at least for now, may lie in the bond markets. James Carville, former economic advisor to President Bill Clinton, once remarked, “I used to think that if there was reincarnation, I wanted to come back as the President or the Pope. But now I would want to come back as the bond market.”

‍

The point being, when policies perceived as economically destabilising are enacted, bond markets respond by demanding a higher premium for capital. These yields influence a broad spectrum of economic variables from government borrowing costs to central bank rates and, subsequently, commercial lending conditions.

‍

Currently, Bitcoin appears to exhibit an inverse correlation with bond yields. As yields rise, Bitcoin prices tend to decline. In an environment where rising bond yields offer more attractive returns, capital is often reallocated accordingly. Given the growing participation of institutional investors in the Bitcoin space, the asset is becoming increasingly sensitive to macroeconomic conditions. This brings us to a broader strategic consideration: will markets eventually recognize digital assets, particularly Bitcoin, as legitimate hedges against risk alongside gold?

‍

Should that shift occur, institutional capital flows would likely drive Bitcoin to unprecedented levels, potentially pushing its valuation toward $500,000 or beyond. Such a move could spark a second wave of growth in the broader crypto market. But the ultimate question remains: will it happen? Only time will tell.

‍

Share this to your socials:

Bitcoin falls as Tariffs hit

sign up to our weekly newsletter