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Safe havens in the digital age: Cryptocurrencies and geopolitical risks

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  • Anh Thi Phuong Hoang

    (University of Economic Ho Chi Minh City, Ho Chi Minh City, Vietnam)

  • Bao Cong Nguyen To

    (University of Economic Ho Chi Minh City, Ho Chi Minh City, Vietnam)

  • Hoang Dinh Tran

    (University of Economic Ho Chi Minh City, Ho Chi Minh City, Vietnam)

Abstract

This study examines the impact of geopolitical risks (GPR) on cryptocurrency volatility, with a focus on green and non-green cryptocurrencies. Geopolitical risks - stemming from conflicts, terrorism, and political tensions - have significant implications for financial markets and investment decisions, as highlighted by recent events such as the Russia-Ukraine war, Israel-Hamas conflict, tensions in the Korean Peninsula, China-Taiwan disputes, and US-UK actions against Houthi forces in the Red Sea. Using a dataset of 10 cryptocurrencies from 2014 to 2023, the analysis employs the GARCH-M-GJR-LEV econometric model to investigate volatility dynamics. The results show a negative correlation between geopolitical risks and cryptocurrency volatility, indicating that as geopolitical tensions increase, cryptocurrency markets tend to stabilize, suggesting their potential as safe havens. Moreover, the findings reveal that green cryptocurrencies are more resilient to geopolitical shocks than non-green ones, highlighting the rising importance of sustainability in financial markets. This research contributes to the literature by offering insights into the differential responses of green and non-green cryptocurrencies to geopolitical events. The findings have practical implications for investors looking for hedging tools during periods of heightened geopolitical uncertainty, as well as for policymakers aiming to understand the broader impacts of geopolitical dynamics on emerging financial markets like cryptocurrencies.

Suggested Citation

  • Anh Thi Phuong Hoang & Bao Cong Nguyen To & Hoang Dinh Tran, 2025. "Safe havens in the digital age: Cryptocurrencies and geopolitical risks," HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE, HO CHI MINH CITY OPEN UNIVERSITY, vol. 15(3), pages 160-180.
    • Handle: RePEc:bjw:econen:v:15:y:2025:i:3:p:160-180
    DOI: 10.46223/HCMCOUJS.econ.en.15.3.3875.2025
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    References listed on IDEAS

    as
    1. Dario Caldara & Matteo Iacoviello, 2022. "Measuring Geopolitical Risk," American Economic Review, American Economic Association, vol. 112(4), pages 1194-1225, April.
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    More about this item

    Keywords

    cryptocurrencies volatility; GARCH-M-GJR-LEV; geopolitical risk; green cryptocurrencies; safe haven asset;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance

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