what goes up when stock market crashes: Safe havens

What goes up when stock market crashes: Safe havens

Quick answer: When investors ask "what goes up when stock market crashes," they are asking which assets or instruments tend to rise or are sought after as equity prices plunge. Typical answers include government bonds, short-term cash instruments, gold and other precious metals, volatility products (VIX and options), inverse ETFs and short positions, safe-haven currencies, and defensive equity sectors — while cryptocurrencies have shown mixed behavior.

截至 2026-01-01，据 The Motley Fool 报道 and major financial outlets, understanding what goes up when stock market crashes helps investors decide on hedges, liquidity plans, and tactical positions during stress.

Definition and context

A stock-market crash is a rapid, deep decline in equity prices across many sectors, typically driven by an economic shock, sudden liquidity shortage, systemic risk, or panic selling. Crashes differ from ordinary corrections by speed and severity; for example, the S&P 500 fell about 34% from peak to trough in the March 2020 COVID crash timeline and roughly 57% from 2007 to 2009 during the global financial crisis. When people ask "what goes up when stock market crashes," they want to know which assets or instruments historically appreciated or rose in demand during these risk-off episodes.

Key triggers of crashes include:

• Macroeconomic shocks (recession indicators, employment shocks, sharp GDP contraction).
• Liquidity events (sudden withdrawal of market liquidity, margin calls).
• Financial-sector failures or contagion (bank runs, credit freezes).
• Geopolitical shocks or black-swan events that reduce risk appetite (note: this article avoids geopolitical analysis beyond market impact).

In crash periods, correlations across assets can shift dramatically: historically uncorrelated assets may move together, and traditional safe havens can fail to protect at times. This reality is central to answering "what goes up when stock market crashes."

Core reasons some assets rise during equity crashes

Understanding why certain assets rise helps decide suitable hedges. Main drivers include:

• Flight-to-safety: Investors reallocate from risky assets (equities) to perceived safe assets (U.S. Treasuries, cash, gold) to preserve capital.
• Liquidity preference: Sellers seek liquid instruments—T-bills, money-market funds, and cash become more valuable as funding dries up.
• Monetary policy responses: Central banks often cut rates or inject liquidity during crises, which can boost bond prices and lower yields.
• Deleveraging and short-covering: Forced selling and later short-covering can create temporary rallies in supposedly safe assets or even in volatility products.
• Correlation shifts: Negative correlations between equities and some assets (e.g., long-duration Treasuries) may strengthen, causing those assets to rise.

These dynamics answer "what goes up when stock market crashes" in both structural (cash, Treasuries) and tactical (derivatives, inverse funds) ways.

Asset classes and instruments that commonly rise

Below are the asset classes and instruments most commonly associated with gains or increased demand when equities fall. Each subsection explains the rationale, typical behavior, and caveats.

Government bonds and high-quality fixed income

Why they rise

• Treasury prices usually increase when investors flee risk because yields fall as demand rises. In nominal terms, this is especially true for long-duration government bonds when rate cuts and flight-to-safety coincide.

How it works

• Bond prices and yields move inversely: increased demand for Treasuries pushes prices up and yields down.
• Duration matters: long-duration Treasuries (e.g., 10-30 year) often rally more in rate-cut scenarios because their present-value sensitivity to rate declines is higher.

Evidence and limits

• During the 2008 global financial crisis and the 2020 COVID crash, U.S. Treasuries were a primary ballast. However, in certain episodes—especially when inflation fears rise—nominal bonds may not be reliable and real yields or inflation-linked bonds can behave differently.

In short: long-duration, high-quality government bonds are among the most consistent answers to "what goes up when stock market crashes," but context matters.

Gold and precious metals

Why investors consider them

• Gold is traditionally viewed as a store of value and an inflation hedge. Some investors buy gold during equity stress as a safe-haven asset or portfolio diversifier.

Behavioral notes

• Gold’s historical performance is mixed: it can rise during some crashes and remain flat or fall in others. Gold often benefits when monetary easing or currency weakness is expected, or when investors seek non-sovereign stores of value.

Caveats

• Gold may not always spike at the onset of a crash if liquidity needs force selling across assets.
• Jewelry demand, central-bank buying, and ETFs can all influence gold’s price dynamics.

Thus, gold is a common but not infallible answer to "what goes up when stock market crashes."

Cash and short-term government paper

Why they rise in demand

• During a crash, liquidity is king. Investors often prioritize cash or cash-equivalents (T-bills, money-market funds) to meet margin calls, maintain optionality, or wait for buying opportunities.

Features

• T-bills and money-market funds offer high liquidity and low credit risk, making them preferred refuges.
• While cash does not “rise” in nominal value, its relative value increases as the purchasing power to act later becomes strategic.

In practice

• Asking "what goes up when stock market crashes" should include cash-equivalents because demand and yields (on short-dated safe paper) often react quickly in stress periods.

Volatility indices and derivatives (VIX, options)

Why volatility spikes

• The VIX (a common measure of implied volatility for S&P 500 options) typically spikes during crashes as option demand surges. Products that track or derive value from volatility can therefore rise sharply.

How investors access this movement

• Long positions in options (buying puts), VIX futures, and certain volatility ETFs can appreciate when implied volatility rises.

Risks and mechanics

• Volatility products are complex. VIX-linked ETFs often suffer from futures roll costs and are generally unsuitable as long-term holds.
• Buying puts provides asymmetric protection but comes with premium costs that can erode returns if volatility does not rise as expected.

Volatility instruments are direct tactical answers to "what goes up when stock market crashes," but they carry unique risk and cost profiles.

Inverse ETFs, short positions, and put options

Designed to profit from declines

• Inverse ETFs, single-stock shorts, and index short positions (or buying puts) are explicit ways to profit from falling equities.

Practical considerations

• Inverse and leveraged inverse ETFs may suffer from daily reset decay and are generally intended for short-term tactical use.
• Short sales carry unlimited loss potential and require borrow costs and margin.
• Put options limit downside but expire; they are insurance-like and cost money.

Therefore, these instruments directly answer "what goes up when stock market crashes" in a profit-seeking sense, but they require understanding of leverage, time decay, and margin.

Defensive equity sectors and “recession-resistant” stocks

Which sectors tend to hold up

• Consumer staples, healthcare, and utilities are commonly called defensive because demand for their goods and services is less cyclical.

Why they can rise or outperform

• In downturns, investors may reweight toward companies with stable cash flows and dividends, so relative performance can improve even if absolute prices decline less.

Limits

• Defensive sectors can still fall in severe crashes; they may only outperform cyclicals rather than produce positive returns.

When answering "what goes up when stock market crashes," mention defensive sectors as likely relative winners rather than guarantees of positive returns.

Safe-haven currencies

Typical currencies

• The U.S. dollar (USD), Swiss franc (CHF), and Japanese yen (JPY) have historically strengthened during global risk-off episodes as investors seek liquidity and safety.

Mechanics

• Currency moves depend on global capital flows, interest-rate differentials, and central-bank actions.

Caveats

• Currency interventions, carry trades unwinding, or unique crisis features can change typical patterns.

Thus, safe-haven currencies often answer the question "what goes up when stock market crashes" on a relative basis for global investors.

Commodities and other real assets

Mixed responses

• Commodities behave heterogeneously. Gold may rise, while industrial metals and oil often decline with weaker economic activity.
• Energy prices can rise in supply-driven shocks even as stocks fall, so the direction depends on the crash cause.

Implication

• Commodities are a nuanced part of the answer to "what goes up when stock market crashes"—some rise, some fall, depending on fundamentals.

Real estate and REITs

Interest-rate sensitivity

• Real estate investment trusts (REITs) and property assets can be sensitive to both economic downturns (lower rents, vacancies) and interest-rate movements (financing costs).

Outcomes

• In rate-cutting environments, some REITs may stabilize or recover due to lower yields elsewhere; in deep recessions REITs can underperform.

Therefore, REITs are not a reliable universal answer to "what goes up when stock market crashes."

Cryptocurrencies (Bitcoin, Ethereum, others)

Empirical record

• Cryptocurrencies show a mixed record in crashes. Sometimes they behave like “digital risk” and fall with equities; other times they decouple and rally as alternative stores of value.

Examples

• In March 2020, Bitcoin dropped more than 50% during the rapid equity selloff, then rallied strongly later in 2020.
• Across other crashes, correlation with equities has varied across time, making crypto an inconsistent hedge.

Practical note

• When asked "what goes up when stock market crashes," cryptocurrencies should be described as having an inconsistent record and therefore not a guaranteed safe haven. Investors preferring on-chain custody or decentralized finance should use secure wallets such as Bitget Wallet and follow platform security best practices.

Mechanisms and market dynamics

A deeper view of why assets move during crashes:

• Supply and demand flows: forced selling increases the supply of risky assets and boosts demand for safe ones.
• Leverage and margin calls: deleveraging amplifies downward equity moves and forces asset sales across markets.
• Central bank policy: rate cuts and liquidity injections can prop bond and some asset prices while influencing real yields.
• Correlation dynamics: correlations between asset classes can converge (risk-on moves together; risk-off moves together) or invert during stress.

These mechanisms explain why the same asset may behave differently across crashes and why the question "what goes up when stock market crashes" has no single, unconditional answer.

Historical examples and episode-by-episode behavior

Concise summaries of major episodes highlight variation in responses.

• 2000 tech bubble: Equity concentration in technology led to sectoral collapses; high-quality bonds and defensive sectors outperformed; gold was relatively muted.
• 2007–2009 global financial crisis: U.S. Treasuries rallied strongly as flight-to-safety; the dollar strengthened; volatility spiked; gold rose later but not uniformly. The S&P 500 lost roughly 57% peak-to-trough.
• March 2020 COVID crash: Rapid equity decline (~34% on S&P 500) saw a VIX spike (to record levels above 80 on some days), Treasury demand surged, cash and money-market instruments were prioritized, and crypto fell sharply on liquidity-driven selling but recovered later.

These episodes show that answers to "what goes up when stock market crashes" depend on crash specifics: liquidity-driven vs. inflation-driven vs. supply-side shocks all yield different winners and losers.

Instruments and strategies to hedge or profit

Below are common instruments and their use cases for hedging or profiting during crashes. This is educational and not investment advice.

Direct holdings (gold, Treasuries, cash)

• Pros: straightforward, highly liquid, and conceptually simple.
• Cons: opportunity cost (cash yield), inflation risk for nominal bonds, and storage/fees for gold.

Derivatives (puts, options spreads, futures)

• Pros: asymmetric protection (puts limit downside), ability to target exposures.
• Cons: costs (premiums), time decay, complexity.

Inverse and volatility ETFs

• Pros: accessible way to short indices or gain from volatility.
• Cons: not for long-term holds due to decay and compounding; intended for short tactical trades.

Short selling and pair trades

• Pros: direct way to profit from declining equities; pair trades can reduce market beta.
• Cons: borrow costs, margin, and risk of short squeezes.

Diversification and asset allocation adjustments

• Pros: systematic rebalancing can buy low/sell high; multi-asset approaches can smooth returns.
• Cons: diversification cannot eliminate systemic crises where correlations rise.

When considering these tools on platforms, users may explore Bitget’s resources for derivatives and custody (subject to local jurisdiction and compliance) and Bitget Wallet for secure crypto storage. Always evaluate costs, liquidity, and personal risk tolerance.

Risks, limitations and caveats

• No asset always rises in every crash: historical patterns are conditional.
• Liquidity risk: some safe assets can become illiquid temporarily, forcing sales at poor prices.
• Counterparty risk: derivatives and leveraged products have counterparty and funding risks.
• Timing and cost: hedges are costly and can erode portfolio returns if used improperly.
• Correlation breakdown: assets that usually hedge may move with equities in severe stress.

Therefore, while answering "what goes up when stock market crashes" is useful, investors must treat hedges and tactical positions with caution and context.

Practical guidance for investors

• Assess risk tolerance and investment horizon before choosing hedges.
• Distinguish hedges (insurance) from long-term diversification.
• Consider laddering fixed-income maturities and holding a portion in highly liquid T-bills or money-market funds.
• If using derivatives, understand expiry, margin, and decay mechanics.
• Avoid panic selling: historically, selling at the bottom crystallizes losses.
• For crypto holders, secure assets in reputable custody such as Bitget Wallet and follow platform guidance on margin and derivatives.

This set of practical steps helps translate the question "what goes up when stock market crashes" into implementable decisions aligned with personal goals.

Empirical evidence and academic/market studies

Researchers study returns across asset classes during recession windows and crash episodes using datasets like daily returns, VIX spikes, bond yields, and commodity prices. General findings include:

• High-quality government bonds and cash historically provide ballast during recessions and crashes.
• Gold shows mixed results: positive in some episodes, muted in others.
• Volatility indices predictably spike during crashes, making volatility-linked strategies effective short-term hedges but poor long-term stores of value.
• Cryptocurrencies show time-varying correlation with equities and remain an inconsistent hedge.

These findings support cautious, multi-tool approaches to answering "what goes up when stock market crashes."

See also

• Safe-haven asset
• Volatility index (VIX)
• Inverse ETF
• Government bond
• Gold (commodity)
• Recession-proof investments
• Portfolio diversification
• Hedging strategies

References and further reading

截至 2026-01-01，据 The Motley Fool 报道 and Investopedia analyses, common safe-haven behaviors are documented across major market episodes. Sources informing this article include The Motley Fool, Investopedia, Morningstar, NerdWallet, and USAToday; academic market-history literature and primary market data (S&P 500 returns, VIX values, U.S. Treasury yields) were also consulted.

• Source summary (selected): The Motley Fool, Investopedia, Morningstar, NerdWallet, USAToday. These outlets provide accessible summaries of which assets historically performed during downturns.

Note: This article is educational and neutral in tone. It does not provide personalized investment advice. For platform-specific products and custody, consider Bitget’s documentation and Bitget Wallet for crypto security.

Further exploration and next steps

Want to test how different hedges behaved across past crashes? Consider reviewing historical charts for Treasuries, gold, VIX, and major crypto assets. For users interested in crypto custody, Bitget Wallet provides secure key management and access to on-chain activity monitoring.

Explore Bitget’s learning resources to understand derivatives mechanics and safe custody practices. Use scenario planning (stress tests) in your portfolio to see which answers to "what goes up when stock market crashes" would have helped in past episodes and which may suit your risk profile.

更多实用建议与资料请在 Bitget 帐户中心和教育页面查看。