Bitcoin Beats Gold on Volatility Protection Amid Rising Treasury Yields

U.S. Treasury yields have surged due to fiscal concerns driving up borrowing costs. In this environment, Bitcoin has emerged as a potentially more effective hard asset than gold for volatility protection.

According to Woofun AI research, Bitcoin's price volatility is significantly lower than that of gold when U.S. Treasury yields rise. The study found that the 90-day correlation coefficient between daily returns of Bitcoin and gold reached a new high since 2020, at 0.59.

This indicates that while both assets are often considered hard assets that benefit from fiscal crises and financial repression, Bitcoin holds a structural edge due to its unique relationship with the yield on 10-year U.S. Treasury bonds. Data shows that when rising bond yields impact non-yielding assets, the correlation between Bitcoin's USD exchange rate and the 10-year U.S. Treasury yield is merely -0.17, compared to gold's correlation of -0.41.

This implies that Bitcoin is less susceptible to the adverse effects traditionally driven by yield fluctuations and is better positioned to break free from the constraints of tightening credit conditions.