Shifting Expectations Upend Traditional Asset Relationships

Investors are no longer responding to a single macro theme as shifting expectations around Fed policy, geopolitical tensions, and the AI investment boom have pushed stocks, gold, and Bitcoin onto sharply different paths this year.

A report from crypto trading firm BIT notes that traditional relationships between equities, gold, and BTC have broken down as investors continuously reprice assets around changing macro narratives.

The S&P 500 has climbed 9% year to date, while gold has fallen 6% and Bitcoin has dropped 31%. The first major shift occurred after President Donald Trump proposed Kevin Warsh to lead the Federal Reserve, abandoning earlier expectations of three interest rate cuts this year and instead pricing in a more hawkish policy path.

Geopolitical events also played a significant role as Iran's closure of the Strait of Hormuz sent oil prices jumping and equities falling. Gold fell as markets expected central banks to redirect funds toward financing reconstruction instead of buying bullion.