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Any port in a storm: Cryptocurrency safe-havens during the COVID-19 pandemic

Author

Listed:
  • Corbet, Shaen
  • Hou, Yang (Greg)
  • Hu, Yang
  • Larkin, Charles
  • Oxley, Les

Abstract

Controlling for the polarity and subjectivity of social media data based on the development of the COVID-19 outbreak, we analyse the relationships between the largest cryptocurrencies and such time-varying realisation as to the scale of the economic shock centralised within the rapidly-escalating pandemic. We find evidence of significant growth in both returns and volumes traded, indicating that large cryptocurrencies acted as a store of value during this period of exceptional financial market stress. Further, cryptocurrency returns are found to be significantly influenced by negative sentiment relating to COVID-19. While not only providing diversification benefits for investors, results suggest that these digital assets acted as a safe-haven similar to that of precious metals during historiccrises.

Suggested Citation

  • Corbet, Shaen & Hou, Yang (Greg) & Hu, Yang & Larkin, Charles & Oxley, Les, 2020. "Any port in a storm: Cryptocurrency safe-havens during the COVID-19 pandemic," Economics Letters, Elsevier, vol. 194(C).
    • Handle: RePEc:eee:ecolet:v:194:y:2020:i:c:s016517652030238x
    DOI: 10.1016/j.econlet.2020.109377
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    References listed on IDEAS

    as
    1. Corbet, Shaen & Hou, Yang & Hu, Yang & Lucey, Brian & Oxley, Les, 2021. "Aye Corona! The contagion effects of being named Corona during the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 38(C).
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    5. Corbet, Shaen & Larkin, Charles & Lucey, Brian, 2020. "The contagion effects of the COVID-19 pandemic: Evidence from gold and cryptocurrencies," Finance Research Letters, Elsevier, vol. 35(C).
    6. Goodell, John W., 2020. "COVID-19 and finance: Agendas for future research," Finance Research Letters, Elsevier, vol. 35(C).
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