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Stablecoins as Safe Haven or Hedging Asset for Cryptocurrencies (in Thai)

Author

Listed:
  • Nittayakamolphun, Pitipat

    (Faculty of Management Science, Buriram Rajabhat University, Thailand)

  • Bejrananda, Thanchanok

    (Faculty of Economics, Maejo University, Thailand)

  • Pholkerd, Panjamapon

    (Faculty of Management Science, Buriram Rajabhat University, Thailand)

Abstract

Due to high returns and different components from other financial assets, cryptocurrencies have gained considerable popularity regardless of their high volatility and risks. Investors may consider investing in safer assets rather than cryptocurrencies. Therefore, this paper studies the role of stablecoins as a safe haven or a hedge against cryptocurrencies. Daily data collection from November 2020 to May 2022 displayed that the stablecoins are fit as hedging assets for cryptocurrency from its decline in yields and the higher volatility. Tether is suitable as a safe-haven asset, while USD Coin and True USD are suitable as diversification assets, and Dai is suitable as both hedging and diversification assets. It is marked that the role of the stablecoin is different for each cryptocurrency. Therefore, it is advisable that investors invest in stablecoins in combination with cryptocurrencies to hedge and diversify their investments.

Suggested Citation

  • Nittayakamolphun, Pitipat & Bejrananda, Thanchanok & Pholkerd, Panjamapon, 2022. "Stablecoins as Safe Haven or Hedging Asset for Cryptocurrencies (in Thai)," Asian Journal of Applied Economics/ Applied Economics Journal, Kasetsart University, Faculty of Economics, Center for Applied Economic Research, vol. 29(2), pages 45-70, December.
    • Handle: RePEc:ris:apecjn:0073
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    More about this item

    Keywords

    stablecoins; cryptocurrencies; safe haven asset; hedging asset;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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