Can Bitcoin be a diversifier, hedge or safe haven tool?

Artikel

This paper investigates whether Bitcoin acts as a diversifier, hedge or safe haven tool for investors in major developed and developing markets, as well as for commodities. This paper employs the GARCH Dynamic Conditional Correlation (DCC) model. The sample covers seven developed and six developing countries, five regional indices and 10 commodity series. The results show that Bitcoin acts as a hedge for investors in most of the developing countries such as Brazil, Russia, India and South Korea, but only as a diversifier for investors in developed countries and for commodities. Moreover, Bitcoin acts as a diversifier for all the 10 commodities studied here. During the US election in 2016, Brexit referendum in 2016, and the burst of Chinese market bubble in 2015, Bitcoin acted as a safe haven asset for both the US and non-US investors. Understanding the role of Bitcoin is important for financial market participants who seek protection against market turmoil and downward movements. Furthermore, our findings would be of interests to regulators and governments to engage in more discussion of the role of Bitcoin in financial markets. This paper contributes to the ongoing debate on the usefulness of Bitcoin for investments. Furthermore, it distinguishes the benefits of Bitcoin as a diversifier, hedge and safe haven to investors in the developed versus developing markets.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Cogent Economics & Finance ; ISSN: 2332-2039 ; Volume: 7 ; Year: 2019 ; Issue: 1 ; Pages: 1-17 ; Abingdon: Taylor & Francis

Classification and Topics

• Classification: Wirtschaft ; General Financial Markets: General (includes Measurement and Data) ; Portfolio Choice; Investment Decisions ; International Financial Markets ; Commodity Markets
• Subject: bitcoin ; hedge ; safe haven ; diversifier ; commodities ; US versus non-US investors

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Stensås, Anders ; Nygaard, Magnus Frostholm ; Kya, Khine ; Sirimon Treepongkaruna
• Event: Veröffentlichung
• (who): Taylor & Francis
• (where): Abingdon
• (when): 2019

Further information

• DOI: doi:10.1080/23322039.2019.1593072
• Handle: http://hdl.handle.net/10419/245214
• Last update: 10.03.2025, 11:41 AM CET