Key Takeaways:
Bitcoin's correlation with the S&P 500 has converged with gold's above 0.50, prompting a prominent economist to declare both assets have lost their safe-haven function.
Bitcoin's correlation with the S&P 500 climbed to 0.55 between late 2025 and early 2026, while gold's correlation surged to above 0.50 in recent months, according to data published by economist Robin Brooks. The yellow metal historically maintained a correlation near zero with equities, and Bitcoin's coefficient traditionally remained below 0.15.
"Gold trades like a high-beta asset. Safe haven no more," Brooks, a prominent economist, said in a post on X. The precious metal now drops alongside equities during periods of risk aversion, he said, describing the behavior as the opposite of how a true safe haven is supposed to function.
The shift stems from a permanent widening of gold's investor base rather than institutional buying or abandonment of the U.S. dollar, Brooks said. A massive run-up in gold prices over the past year mechanically inflated central bank balance sheets, while marketing of the "debasement trade" throughout late 2025 drew a wave of retail investors into the market. These new buyers are fundamentally more skittish and pro-cyclical than traditional bullion holders, according to Brooks.
The convergence carries implications for portfolio construction. Risk-parity and macro hedge funds that allocated to both Bitcoin and gold as portfolio hedges may face reduced diversification benefits if the elevated correlation persists. Brooks said he initially believed the high equity correlation would fade as retail "tourists" were flushed out during market corrections, but he is now convinced that gold's mechanics have been structurally altered.
The Retail Inflow Effect
The debasement trade narrative — the thesis that fiat currency depreciation would drive demand for hard assets — gained traction through the second half of 2025, drawing a wave of retail capital into gold. Brooks' data shows these new participants exhibit more pro-cyclical trading behavior than the institutional and sovereign buyers that historically anchored gold demand. The result: gold now behaves more like a risk asset than a避险 instrument, falling when equities fall rather than providing the negative correlation that defines a traditional safe haven.
Bitcoin's correlation trajectory followed a similar path but for different reasons. The asset's climb to a 0.55 correlation with the S&P 500 during the late 2025 to early 2026 period reflected its growing integration with mainstream financial markets, including the launch of spot ETFs and increased institutional participation. Unlike gold, which had centuries of safe-haven reputation to lose, Bitcoin's correlation with equities has been a known risk for institutional allocators — though the magnitude of the current reading is unprecedented.
What to Watch
The persistence of the high correlation through the remainder of 2026 will serve as the next verifiable milestone, Brooks said. Monitoring capital flows across major commodity and crypto-asset trading platforms will indicate whether the structural shift is permanent. If gold and Bitcoin continue to move in lockstep with equities during the next risk-off episode, the safe-haven thesis for both assets will face further erosion.
This article is for informational purposes only and does not constitute investment advice.
