Trump’s tariffs exposed the systemic weakness of markets — unpredictable U.S. policy can wreak havoc globally with remarkable ease. The President’s announcements of widespread tariffs in April 2025 saw markets tailspin into turmoil. So, could crypto be a wise choice when the economy is melting? This guide explores why Bitcoin might be a safe haven during a U.S. recession.
KEY TAKEAWAYS
➤ Safe havens evolve over time, and traditional ones like bonds and the dollar are losing trust amid growing economic instability.
➤ Bitcoin’s fixed supply, decentralized design, and structural independence make it a compelling potential hedge during U.S. recessions.
➤ Despite its promise, Bitcoin has drawbacks as a safe haven, especially for lower-income users facing volatility, high fees, and limited access.
➤ Bitcoin’s correlation to risk assets like tech stocks suggests it still has ground to cover before becoming a fully reliable safe haven.
What is a safe haven during a recession?
A recession is a significant decline in economic activity, particularly over an extended period of time. Some of the ways you can spot a recession are widespread bankruptcies, unemployment, and reduced discretionary spending.
In today’s highly financialized world, many people seek ways to preserve their purchasing power through safe havens — assets that either maintain or increase their value during times of currency depreciation, market volatility, or economic uncertainty (over a period of time).
History of safe havens
What investors consider safe havens has changed throughout time. Historically, many people held their wealth in precious metals like gold and silver, jewelry, property and land, grain, silverware, and even currencies. However, as time went on, the safety of these assets fluctuated, and new safe havens became prominent.
Around the 18th century, certain types of debt (e.g., government and private debt) began to gain utility as safe assets around the world. Today, these assets play a big role in monetary policy, macroeconomic activity, and, yes — recessions.
Some examples of private and government debt that people use as safe assets are sovereign bonds or government-insured demand deposits.
The U.K. was one of the first nations to issue official government bonds to finance war with France. After the massive bank failures of the Great Depression in the 1930s, the U.S. government began to insure demand deposits (dollars held in bank accounts). Other countries followed suit much later.
Why does this matter?
The financial landscape began to shift in the late 20th century. As short-term wholesale funding markets grew in importance, privately produced safe assets like repos took center stage until the 2008 financial crisis exposed their fragility.
However, starting in the late 1970s, the US financial system underwent a significant transformation in which the role of demand deposits declined dramatically, and short-term wholesale funding became very sizeable and, thus, important. The financial crisis of 2007–2008 showed, once again, that privately produced safe assets [i.e., short-term debt like sale and repurchase agreements (repo)] are not always safe. Short-term safe debt is subject to runs, threatening systemic collapse of the financial system.
— Gary Gorton, The History and Economics of Safe Assets
Additionally, the threat of sweeping tariffs in the U.S. sparked a wave of economic uncertainty, igniting fears of inflation, trade wars, and policy instability. In response, markets sent clear distress signals.
The U.S. 10-year Treasury yields spiked, and the DXY (U.S. Dollar Index) dropped sharply. These are highly unusual moves to happen simultaneously. Typically, Treasuries and the dollar strengthen in times of crisis. This time, both faltered.
This rare dynamic reflects a deeper shift: a growing loss of confidence in the traditional pillars of financial safety. Investors are questioning whether today’s safe assets — like sovereign bonds or the U.S. dollar — can still offer the protection they once promised.
This is where Bitcoin enters the conversation. Born in the aftermath of the 2008 financial crisis, Bitcoin was designed as an alternative to centralized monetary systems and an answer to financial crises such as these. With a fixed supply and no ties to government policy, it represents a fundamentally different approach to storing value.
Why Bitcoin might be a safe haven in a U.S. recession
Wealth is never destroyed. It is merely transferred. And that means that on the opposite side of every crisis, there is an opportunity.
— Mike Maloney.
Regardless of the volatility of the S&P500, complex discussions of basis and carry trades, and the divergence of the U.S. 10-year Treasury and DXY, it’s clear that investors are losing confidence in traditional safe havens. As a result, the world is at a turning point. Satoshi Nakomoto created Bitcoin for these exact types of scenarios.
Wealth will naturally find its balance and flow into other valuable assets as time passes. This alone puts Bitcoin in the conversation as a hedge. So, how could this work in practice? Let’s look at a few ways that Bitcoin could possibly be a safe haven during a U.S. recession.
1. “Deflationary” properties
In crypto, the term deflation is often misused. The actual definition is a sustained decrease in the general price level of goods and services within an economy. What crypto users typically mean when they say Bitcoin is deflationary is that its supply decreases over time.
An important economic concept is called supply and demand. Generally speaking, supply and demand have an inverse relationship with regard to price.
If the supply of a good or service decreases, and demand remains consistent or increases, then the price increases. Conversely, if the supply increases and demand remains steady or decreases, then the price of that good or service is likely to decrease.
Bitcoin’s supply decreases by design. The total supply of Bitcoin is 21 million BTC, after which the protocol will cease to issue new Bitcoins. We also anticipate some level of a further reduction in available supply as BTC holders (unfortunately) pass away, removing even more coins from circulation.
If demand holds steady or increases, this puts upward pressure on the price of BTC. Additionally, the Bitcoin protocol issues 50% fewer Bitcoins every halving.
The chart below shows the amount of Bitcoin in circulation compared to its price.
As stated previously, one of the hallmarks of a safe haven is stability or increased value over time. As this chart shows, Bitcoin satisfies this property, making it a possible hedge in a U.S. recession.
2. Store of value
One of Bitcoin’s earliest narratives was its use case as digital cash for peer-to-peer payments. However, due to many factors, it eventually pivoted to become a store of value (SoV). This use case draws comparisons as to how gold is commonly viewed today — as a SoV.
Gold has a long history as a traditional recession hedge. It tends to perform well when inflation is high, equity markets fall, or there is geopolitical or economic uncertainty. Although many people consider Bitcoin a SoV like gold. Here’s how Bitcoin vs. gold stacks up as an investment:
| Bitcoin | Gold | |
|---|---|---|
| History | Less than two decades | Centuries of use as a store of value |
| 2022-2023 interest rates/quantitative tightening | Fell hard, traded like a tech stock | Virtually flat |
| Covid recession (2020) | Crashed during Covid but rallied in 2021 | Hit an ATH during Covid |
| Counterparty risk | None | None |
| Adoption | Growing, but limited | Wide |
| Supply | Limited | Unknown |
Gold’s price tends to remain relatively flat, with slight increases over time and limited downside. Bitcoin is still volatile and, at one point, crashed almost 80% from its all-time high.
However, Since its inception in January 2009, Bitcoin has gone from essentially $0 (technically $0.0008 when it first traded in 2010) to around over $100,000 in 2025. That’s an increase of over 8,000,000,000%!
Additionally, Bitcoin has a fixed issuance or block reward that limits the stock-to-flow (S2F). A higher S2F means the asset is more scarce relative to its production/issuance rate, which makes it more “hard money” and theoretically better at preserving value. Gold’s flow is relatively stable and difficult to inflate quickly (though it could rise with enough capital investment in mining).
However, Bitcoin, with a programmatically declining flow and fixed cap, has an even higher S2F. This technically makes it a more rigid monetary asset, though still early in its adoption as a global hedge.
In conclusion, when both equities (risk assets) and Treasuries (traditional safe havens) feel risky or unattractive, investors start looking for alternative hedges or neutral zones, like gold, because certain properties make it a SoV. Bitcoin has some similar properties to gold, which makes it a potential safe haven in a U.S. recession.
3. Structural independence
Recessions aren’t always predictable. While many recessions lead to deflation or disinflation due to falling demand and rising unemployment, others (particularly those triggered by supply shocks or policy) can result in stagflation, where inflation rises even as growth slows.
These complex and often contradictory environments challenge the effectiveness of traditional safe havens like sovereign bonds, fiat currencies, or equities, all of which are closely tied to central bank actions, government policy, and corporate performance.
Bitcoin, on the other hand, is structurally independent of these forces. It is not a corporate entity subject to earnings reports, layoffs, or supply chain shocks (that may arise from tariffs or lockdowns). Bitcoin operates outside of the traditional financial system. It has:
- No central issuer
- No monetary policy
- No national allegiance
This independence allows Bitcoin to behave in idiosyncratic ways during recessions, uncorrelated with the usual downturn dynamics. While it remains volatile and influenced by broader liquidity cycles, its fixed supply and decentralized nature position it as a potential hedge in recessions — especially those marked by monetary instability or systemic distrust.
Drawbacks of Bitcoin as a safe haven
There are many reasons why Bitcoin could be a potential safe haven in the event of a U.S. recession; however, there are also reasons it is not ideal in certain circumstances. There are real limitations to BTC as a safe haven, depending on who you are and what your financial situation looks like.
Problem 1
For starters, Bitcoin is often compared to gold — and in some ways, that comparison holds. Like gold, it’s seen as a store of value. But, also, like gold, it’s expensive, volatile, and not especially accessible to people with limited income.
If you’re only able to buy a small fraction of a Bitcoin in your local currency, high network fees can make even moving or spending it impractical. It’s hard to call something a “safe” asset when using it can cost more than what you’re trying to protect.
This isn’t a deal-breaker for the wealthy. They can afford to hold and ignore volatility and weather downturns. However, if you have a limited income and perhaps bought Bitcoin near a peak and need liquidity, it can feel more like a liability than a safe haven.
In that sense, Bitcoin (like gold) might work better as a safe haven in theory than in practice, especially for those who can’t afford to wait out market cycles or pay transaction costs.
Problem 2
Another limitation is that Bitcoin doesn’t always behave like a hedge; sometimes, it trades like a tech stock. In several downturns, especially during liquidity crunches or Fed tightening cycles, Bitcoin has shown a high correlation to equity markets, particularly the Nasdaq.
This means that when traditional finance (TradFi) takes a hit, Bitcoin often goes down with it — not away from it. This isn’t ideal for an asset that aims to stand apart from the legacy financial system.
For Bitcoin to evolve into a reliable safe haven, it needs to decouple further from risk assets and establish more independent behavior especially during moments of systemic stress.
Only time will tell
Due to the narrative around Bitcoin as digital gold and its hard money properties, it has the potential to become a safe haven in the event of a U.S. recession, especially as the world changes. However, as this guide points out, BTC has a number of boxes to check before this becomes a reality. In many ways, Bitcoin remains a highly risky asset due to its short history and high volatility.
Disclaimer: This article is for informational purposes only and should not be considered investment advice. Always do your own research (DYOR). Never invest more than you can afford to lose.
Frequently asked questions
Bitcoin has a lot of properties that make it advantageous for a possible safe haven in a U.S. recession. However, it may not be a one-size-fits all solution, depending on your income level. Its inherent fundamentals may separate it from certain geopolitical events, but its correlation to tech stocks makes it subject to liquidity crunches at times.
Many investors still consider Bitcoin a risk asset. This is due to its short history and high volatility. Bitcoin has the potential to be considered a safe asset, but it will have to show some price stability over time first.
Many investors already hold Bitcoin to diversify their portfolios. It is not centrally issued by any nation, is not inherently connected to a single business or counterparty, and is the greatest performing asset in history. However, Bitcoin will have to show staying power before it is considered a safe haven.
Technically speaking, Bitcoin can run as long as there is a single machine with a copy of the ledger and protocol. Whether or not Bitcoin has a future as a safe haven is unknown.
Uphold
eToro
eToro
eToro
eToro
Plus500
Coinbase
Moonacy
Disclaimer
In line with the Trust Project guidelines, the educational content on this website is offered in good faith and for general information purposes only. BeInCrypto prioritizes providing high-quality information, taking the time to research and create informative content for readers. While partners may reward the company with commissions for placements in articles, these commissions do not influence the unbiased, honest, and helpful content creation process. Any action taken by the reader based on this information is strictly at their own risk. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
