The concept of “safe haven” assets, historically characterized by gold and government bonds, is now facing unprecedented scrutiny amid market volatility.
For many years, portfolio strategy and risk mitigation were straightforward: a composition of 60% equities and 40% bonds, with capital typically seeking refuge in gold and government bonds during market downturns. These assets were known for their stability and reliability, making them a preferred choice for investors seeking shelter from market fluctuations. However, in today’s environment of continuous trading, geopolitical tensions, and diminishing trust in governmental systems, this rationale is being challenged, leading to the question: should we redefine what constitutes a safe haven?
Introducing a new contender: bitcoin.
Bitcoin is notoriously volatile, often misinterpreted, and frequently dismissed as merely a speculative investment by various sectors on Wall Street and in mainstream finance. Nevertheless, it has experienced a remarkable resurgence since the market’s lows during the COVID-19 pandemic.
Since the market crash in March 2020, bitcoin has surged over 1,000%. In contrast, long-duration bonds, as evidenced by the iShares 20+ Year Treasury Bond ETF (TLT), have plummeted by 50% from their highs in 2020. Even gold, the historical safe haven—having gained 90% over five years—appears less appealing when accounting for the substantial monetary debasement that occurred, which involved printing over 40% of the total USD money supply in 2020 alone.
Nonetheless, bitcoin’s credentials as a safe haven remain a point of contention among investors.
During several recent risk-off moments, it has functioned less as a hedge and more as a high-risk asset in relation to the Invesco QQQ Trust, Series 1 ETF:
- Covid-19 (March 2020): BTC dropped 40% while QQQ went down 27%
- Bank crisis (March 2023): BTC fell 14%, QQQ declined 7%
- Yen carry trade unwind (August 2024): BTC decreased by 20%, QQQ fell by 6%
- Tariff-related selloff (April 2025): BTC dropped 11%, while QQQ fell 16%
The first three instances illustrate bitcoin as resembling a leveraged technology stock. However, the latest tariff-triggered market upheaval broke this pattern, where bitcoin fell less than the Nasdaq, indicating relative resilience in an otherwise challenging macroeconomic landscape impacted by tariffs from President Trump.
While these instances may not suggest a definitive trend, they underscore an emerging pattern: the financial landscape has evolved.
“Assets that are not tied to state control, such as bitcoin, are expected to perform well,” noted a research document. “Assets devoid of political bias should remain insulated from the current global tensions.”
Bitcoin, while undoubtedly volatile, boasts features including global liquidity, decentralization, and resistance to censorship and tariffs, which may render it more robust than traditional safe havens during periods of geopolitical strife and financial suppression.
On the other hand, established safe havens are losing their sheen. The gains in gold seem less substantial when weighed against the vast expansion of money supply. Long-duration bonds are similarly struggling, particularly as the 30-year treasury yield approaches 5%, creating challenges for portfolios reliant on these assets.
Since the sell-off commenced last Thursday, the Nasdaq has experienced a nearly 10% decline, bitcoin has dipped by 6%, TLT has dropped over 4%, and gold has seen a more than 3% decrease. Meanwhile, the DXY index, which tracks the U.S. dollar against a range of foreign currencies, has remained largely unchanged, while the critical U.S. 10-year Treasury yield has surged nearly 8%.
In terms of risk-adjusted performance, bitcoin is standing firm, yielding similar results to traditional safe-haven assets like gold or TLT.
Analyzing these four major financial crises reveals a pattern: each downturn in bitcoin has signaled a significant long-term bottom. During the COVID crash, bitcoin fell to approximately $4,000, a level it has not revisited. In the banking crisis of March 2023, it briefly dipped below $20,000 before beginning its upward trajectory. The August 2024 yen carry trade unwind brought it down to $49,000, a price point it has not returned to. If historical trends hold, the current low may establish the next long-term support level.
So, the question remains: Is bitcoin a safe haven?
If the traditional view—characterized by low volatility and downside protection during crises—holds true, then bitcoin may fall short.
However, in a financial ecosystem characterized by sovereign risks, inflation, and persistent policy unpredictability, bitcoin begins to emerge as an asset that investors should contemplate for its durability, neutrality, and liquidity.
Within this shifting landscape, it seems that bitcoin might be passing the safe haven test after all. Perhaps the old guidelines defining safe havens require an update.