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New research casts doubt over cryptocurrencies’ ‘safe haven’ properties

New research published in the International Review of Financial Analysis suggests that claims cryptocurrencies are immune to economic risks should be taken with caution.

This should have implications for the diversification strategies of investors, as well as inform the debate around the regulation of crypto. Policymakers and investors should be aware that while crypto investments appear to serve as a good hedging instrument during normal economic conditions, their hedging ability in relation to certain risk factors is distorted or weakened in periods of economic turbulence, as evidenced during the COVID-19 pandemic and the Russian invasion of Ukraine.
Dr Danial Hemmings ,  Bangor Business School, Bangor University
The full paper is available in the International Review of Financial Analysis 94 (2024).

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