Do conventional currencies hedge cryptocurrencies?


Shahzad S.J.H. Balli F. Naeem M.A. Hasan M. Arif M.
August 2022Elsevier B.V.

Quarterly Review of Economics and Finance
2022#85223 - 228 pp.

We examine the hedge and safe-haven properties of conventional currencies for four cryptocurrencies — Bitcoin, Ethereum, Ripple, and Litecoin. We extend the Baur and McDermott (2010) framework, where the safe-haven role is examined against reverse explosiveness in cryptocurrency prices. Our results suggest that the Japanese yen is the most consistent hedger for cryptocurrencies, followed by the British pound, Chinese yuan, and the Euro. All currencies, except the Euro, perform a safe-haven role for Bitcoin and its fork, Litecoin. The safe-haven potential of the Euro, Japanese Yen, and Chinese Yuan is also confirmed during the negative explosiveness periods of the cryptocurrency market.

Cryptocurrency , Currency , Hedge , Safe-haven

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Montpellier Business School, France
University of Montpellier, Montpellier Research in Management, France
South Ural State University, Chelyabinsk, Russian Federation
School of Economics and Finance, Massey University, New Zealand
UCD College of Business, University College Dublin, Ireland
The University of Lahore, Lahore, Pakistan
Department of Business Administration, Shaheed Benazir Bhutto University, Shaheed Benazirabad, Pakistan
Al-Farabi Kazakh National University, Almaty, Kazakhstan

Montpellier Business School
University of Montpellier
South Ural State University
School of Economics and Finance
UCD College of Business
The University of Lahore
Department of Business Administration
Al-Farabi Kazakh National University

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