So Much for the Haven of ‘Digital Gold’—Spencer Jakab
The Wall Street Journal
Jun 17, 2025
An odd thing happened to financial markets when Israel bombed Iranian nuclear sites last week.
For the most part, the moves were what you would have expected: Stocks fell worldwide and U.S. benchmark crude jumped 7.3% Friday, wrapping up its biggest weekly gain since the Oct. 7, 2023, massacre in Israel. Meanwhile, the price of gold, a traditional haven in times of conflict, rose 1.5% to a record.
But gold’s supposed digital equivalent failed to play the same role. Bitcoin fell by 1.6% Friday, even more than the S&P 500, concluding a 4% drop over three days.
This isn’t the first time: Back in April, in the week following President Trump’s “Liberation Day” announcement, stocks swooned worldwide. Bitcoin did too, dropping 7.5% in six days. And it was directionless in February 2022 as Russian troops massed on Ukraine’s border and then invaded. Gold, meanwhile, edged higher as tensions rose and kept climbing when the shooting began.
It is tempting to gloss over bitcoin’s failures as a hedge against chaos in what has otherwise been a great year for cryptocurrencies. The U.S. government has gone from skepticism to a full-throated endorsement under the Trump administration.
Even if it has lost some antiestablishment street cred, bitcoin still shares qualities with gold. Its supply is limited, it is a trustless asset, it can’t be destroyed and it is even easier than gold to transfer or hide.
So why has it failed as a geopolitical insurance policy? One reason is bitcoin’s digital nature. If you were to find yourself sitting in the smoldering ruins of your town after society collapsed, cryptocurrency at a brokerage like Coinbase, or even on a thumb drive in your pocket, wouldn’t be useful. Physical gold still might.
Another reason is why most people buy crypto lately: It excites speculators in ways gold doesn’t. In the past five years, bitcoin has become positively correlated with stocks, notes CME Group.
When investors are in a risk-on mood these days, they especially feel like buying cryptocurrency or other assets with little in the way of intrinsic value such as meme stocks. It’s the “number go up” trade.
Yet bitcoin could shine as brightly as gold in one calamity on investors’ minds lately: a loss of faith in fiat currencies like the dollar. Rising government indebtedness worldwide might make inflation the easiest way out, boosting assets that are nobody’s liability.
So while bitcoin doesn’t seem to be an all-weather insurance policy, at least it has a lot more upside if things go very right instead of very wrong. What other asset appeals to both extreme pessimists and optimists?
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