For roughly two decades, U.S. investors relied on a dependable inverse relationship between stocks and Treasuries: when equities fell, bond prices rose, cushioning portfolio losses. That correlation underpinned countless investment products and shaped how a generation of allocators managed risk. According to the article, this hedging dynamic is now breaking down, with Treasuries no longer reliably rallying during equity declines. Instead of offsetting losses, bonds are moving alongside stocks, amplifying market selloffs rather than dampening them. This shift removes a key stabilizer that previously absorbed shocks across diversified portfolios. Bitcoin, often held as a risk asset within these allocations, is exposed to the fallout, facing added downward pressure as the traditional safety net erodes. The change signals a broader reordering of market correlations, raising questions about portfolio construction and how investors will manage risk in an environment where Treasuries no longer serve as a reliable buffer.
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