UCLA

This study examines Bitcoin’s role in financial markets, comparing its risk, return, and correlation with traditional assets—gold, U.S. Treasury bonds (TLT), and the S&P 500—from 2018 to 2025. The key question is whether Bitcoin functions as "digital gold" with safe-haven properties. The results show that Bitcoin is highly volatile, with weak correlation to gold (0.12) and bonds (-0.03), but a moderate correlation with equities (0.29). During market stress, Bitcoin’s correlation with gold remains low (0.239), challenging its safe-haven status. A risk-reward analysis shows that Bitcoin has higher volatility but lower returns compared to traditional assets. The maximum drawdown analysis further highlights its instability, with a -913% decline, far exceeding gold’s -254% drawdown. Overall, the findings suggest that Bitcoin behaves more like a speculative asset rather than a stable hedge or store of value, casting doubt on its comparison to gold as a financial safe haven.