Bitcoin in Times of Economic Crisis: Is It Still a Hedge or Just Another Risk Asset?

Key Takeaways

• Bitcoin offers long-term inflation protection, though its performance can vary across different economic cycles.
• Institutional strategies increasingly treat Bitcoin as a speculative macro asset, not a classic haven.
• Bitcoin shows periods of low correlation with equities but also co-moves during risk-off events.
• Despite volatility, Bitcoin’s fixed supply and programmability make it viable as long-term digital value storage.

Over the past decade, Bitcoin has evolved from a niche cypherpunk experiment into a globally recognized, censorship-resistant, decentralized asset class. Its narrative has shifted, from peer-to-peer digital cash to digital gold, and more recently, to a high-volatility macro asset that trades around the clock on a global stage.

With global economic pressure building in 2025, the question returns to whether Bitcoin still functions as a reliable hedge during times of financial stress or if it has become just another asset that moves with the broader risk cycle. 

This article explores Bitcoin’s role in today’s macroeconomic landscape and evaluates whether its reputation as a hedge remains valid.

Is Bitcoin Still a Hedge Against Inflation in 2025?

Traditional inflation hedges exist to protect capital when fiat currencies lose value. Gold, real estate, and commodities have long been relied on, especially in low-rate, high-liquidity environments, periods when central banks keep interest rates low and inject liquidity into markets to stimulate growth. In such settings, investors often seek assets with limited supply or intrinsic value to safeguard purchasing power.

Bitcoin entered the inflation hedge conversation with a fundamentally different value proposition. Unlike fiat currencies, whose supply can be expanded at the discretion of central banks, Bitcoin’s supply is hard-capped at 21 million coins—a rule enforced by code, not policy. 

There is no central authority that can intervene or alter its issuance in response to political or economic pressures. This built-in transparency and predictability distinguish Bitcoin from traditional currencies, which are often subject to monetary expansion and money printing.

These characteristics make Bitcoin more than just a hedge against inflation. It represents a savings technology designed not only to preserve purchasing power but, over time, to increase it. While traditional hedges aim to protect capital from erosion, Bitcoin introduces the possibility of outpacing inflation entirely.

Bitcoin as a Safe Haven During Economic Crisis 

Unlike conventional safe-haven assets that tend to rise when equities fall, Bitcoin has not consistently demonstrated that inverse behavior. During the sharp equity correction between February and March 2025, the S&P 500 dropped by 21%. 

Over the same approximate period, Bitcoin fell from $109,200 on January 19 to a low of $74,600 on April 7, before recovering to around $94,339 by April 23, 2025. 

This Bitcoin price behavior closely mirrored broader risk sentiment, highlighting Bitcoin’s volatility and its tendency to move in sync with risk assets during periods of uncertainty.

Still, Bitcoin is not entirely tethered to the traditional cycle. In countries facing capital flight, currency controls, or devaluation, Bitcoin has taken a different role, serving as a cross-border store of value or financial savings vehicle . 

Why Bitcoin’s 24/7 Market Matters in Times of Economic Crisis

While Bitcoin may not behave like a traditional safe haven, its role during periods of economic stress or crisis is hard to overlook. It doesn’t offer the same stabilizing effect as gold, but it remains available when other systems are not, and that matters. This utility comes from its 24/7 global market. 

Unlike equities and bonds restricted by trading hours and intermediaries, Bitcoin moves nonstop, borderless, permissionless, and always on. During financial shocks or geopolitical unrest, especially on weekends when legacy markets shut down, Bitcoin is often the only significant asset that can be accessed and liquidated immediately. 

That constant availability might induce harsh volatility, but it acts as a digital investment instrument to respond in real-time when traditional finance is paused. In economic or geopolitical uncertainty, this window may serve as a potential lifeline for those in search of liquidity.

Bitcoin vs Gold: Which Is the Better Inflation Hedge

Gold is tangible, trusted, and deeply entrenched in the global financial system. Backed by centuries of institutional acceptance, a well-established supply chain, and central bank reserves, its strength lies in its consistency. Gold is steady, and that reliability is exactly the point.

Bitcoin, on the other hand, is digital, borderless, and built on code. Governments don’t influence Bitcoin’s supply. No bond market depends on it, and no legacy infrastructure is required to use it. Bitcoin moves fast and is sometimes highly volatile, but it also offers transparency and portability that gold cannot match.

Institutional Adoption: Which Major Players Are Holding Bitcoin in 2025?

Bitcoin has made its way into the portfolios of hedge funds, family offices, and forward-leaning pension funds. Here are a few notable examples of institutions and entities that have added Bitcoin to company treasuries and individual portfolios:

• Strategy: The most prominent corporate holder of Bitcoin, Strategy has made Bitcoin its primary treasury reserve asset, with holdings exceeding 538,000 BTC as of April 26, 2025.
• Tesla: Elon Musk’s company purchased $1.5 billion worth of Bitcoin in early 2021. While Tesla later trimmed its position, it continues to hold 11,509 BTC through the first quarter of 2025. 
• Fidelity: Through Fidelity Digital Assets, the firm offers crypto custody and trading services to institutional clients and has launched Bitcoin-related investment products.
• BlackRock: The world’s largest asset manager has filed and launched spot Bitcoin ETFs and provides exposure through various funds, signaling increasing institutional acceptance.
• Norwegian Government Pension Fund: While it hasn’t purchased Bitcoin directly, Norway’s sovereign wealth fund holds a stake in Strategy, the company with over 538,000 BTC. This indirect ownership means the fund is exposed to Bitcoin’s price movements through its investment in Strategy stock.
• MassMutual: The 169-year-old insurance giant invested $100 million into Bitcoin through New York Digital Investment Group (NYDIG), marking one of the first moves by a major insurer into the space.

These cases illustrate a growing institutional footprint in the Bitcoin market, though approaches and risk appetites vary widely.

Institutional Views: Bitcoin During a Recession

When liquidity tightens and markets sell off, Bitcoin is often among the first risk assets to fall in value and one of the last assets to stabilize, before making substantial gains. Still, that volatility doesn’t disqualify it from being a strategic long-term holding.

Some institutions treat Bitcoin as a macro signal, responsive to shifts in monetary policy. That said, few institutions view Bitcoin as a recession-proof asset in 2025. When liquidity dries up, risk assets sell off, and Bitcoin is often first to fall, then one of the last to stabilize and make larger gains.

That doesn’t disqualify Bitcoin from being a strategic asset to hold for the long run. For instance, On Aprill 22, 2025, Strategy increased its Bitcoin holdings by 6,556 BTC for $555.9 million at $84,785. With the price sitting at $93,456 on April 23, 2025, this purchase is already plus ten percent. 

For more forward-thinking allocators, Bitcoin is less about hedging and more about gaining early exposure to a potential shift in the global financial order, one that could accelerate if the U.S. or other major governments begin adding Bitcoin to strategic reserves. These investors aren’t just looking for short-term protection but positioning themselves ahead of a broader transition toward a digitally anchored economy.

Benefits and Drawbacks of Bitcoin as an Economic Hedge

The benefits and drawbacks associated with Bitcoin being used as an economic hedge include:

Benefits

• Fixed supply: Bitcoin’s supply is limited to 21 million coins, which removes inflation risk tied to monetary expansion or central bank intervention.
• Decentralized and borderless: Bitcoin operates on a decentralized network without relying on governments, central banks, or financial intermediaries, making it globally accessible even during geopolitical instability.
• 24/7 market access: Bitcoin trades continuously, providing immediate liquidity during crises, including weekends and holidays when traditional markets are closed.
• Long-term outperformance: Bitcoin has outpaced most traditional assets in terms of compounded returns over the past decade, making it a potential long-term store of value.
• Censorship resistance: Bitcoin offers individuals and institutions a secure exit from closed financial systems in jurisdictions facing capital controls or asset seizures.

Drawbacks

• High volatility: Bitcoin experiences sharp drawdowns, often exceeding 30%, making it unsuitable for short-term stability or cash-flow-sensitive portfolios.
• Lack of institutional stability: Unlike gold or bonds, Bitcoin lacks broad central bank support or consistent regulatory treatment, contributing to risk perceptions.
• Correlation with risk assets: During market-wide selloffs, Bitcoin often moves in line with equities, limiting its reliability as a defensive asset in traditional portfolios.
• Uncertain regulatory outlook: Regulatory policies on Bitcoin continue to evolve across jurisdictions, creating compliance and custody challenges for institutional investors.
• No intrinsic yield: Bitcoin doesn’t generate income like dividends or bond interest, which can be a disadvantage in high-rate or yield-focused environments.

Conclusion

In 2025, despite its volatility, Bitcoin continues to post a decade-long compound annual growth rate that outpaces most traditional assets, hardly typical for a so-called speculative instrument. Yet, it still regularly experiences drawdowns of 30% or more. Few assets with that level of volatility are considered reliable stores of value, especially when viewed through a short-term lens.

In periods of economic stress, Bitcoin may not function as a traditional safe haven, but it serves as an option for those who see the existing financial system as not only challenged but in need of structural change. 

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