Is Bitcoin the 'Digit Gold'——A Potential Safe-haven Asset?

Research Article
Open access

Is Bitcoin the 'Digit Gold'——A Potential Safe-haven Asset?

Shupeng Guan 1* , Han Jiang 2 , Muyang Zhou 3 , Jianuo Liu 4
  • 1 School of Mathamatics,University of Birmingham,B15 2TT,United Kingdom    
  • 2 Wuhan Britain-China School,430030, China    
  • 3 Information School, University of Washington, 98195, United States    
  • 4 Material Science&Engineering, Nanyang Technology University,639798,Singapore    
  • *corresponding author wayneg0530@163.com
Published on 21 March 2023 | https://doi.org/10.54254/2754-1169/4/2022910
AEMPS Vol.4
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-915371-17-1
ISBN (Online): 978-1-915371-18-8

Abstract

In this paper, we examine whether bitcoin has the potential to become safe-haven asset that can rival gold in the future. We observed, compared and analyzed and the performance of bitcoin and gold in face of a falling market and inflation pressure. We can see if investors can rely on bitcoin to reduce risk exposure significantly through empirical tests. At the end of our research, we found that bitcoin did not perform as well as gold did when faced with market crash and inflation. Therefore, we conclude that bitcoin does not yet show the potential to possess risk-proof merits as gold, the traditional high-quality hedge asset. Gold would probably remain the preferred hedge asset against cryptocurrency for now.

Keywords:

Sharpe ratio, Bitcoin, portfolio, gold

Guan,S.;Jiang,H.;Zhou,M.;Liu,J. (2023). Is Bitcoin the 'Digit Gold'——A Potential Safe-haven Asset?. Advances in Economics, Management and Political Sciences,4,392-401.
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References

[1]. Wong, W. S., Saerbeck, D., & Delgado Silva, D. (2018, February 18). Cryptocurrency: A new investment opportunity? an investigation of the hedging capability of cryptocurrencies and their influence on stock, Bond and gold portfolios.

[2]. Corbet, S., Hou, Y. (G., Hu, Y., Larkin, C., & Oxley, L. (2020, July 7). Any port in a storm: Cryptocurrency safe-havens during the COVID-19 pandemic. Economics Letters.

[3]. Conlon, T., & McGee, R. (2020, May 24). Safe haven or risky hazard? bitcoin during the COVID-19 bear market. Finance Research Letters.

[4]. Hasan, M. B., Hassan, M. K., Rashid, M. M., & Alhenawi, Y. (2021, August 13). Are Safe Haven assets really safe during the 2008 global financial crisis and covid-19 pandemic? Global Finance Journal.

[5]. Sharpe, William F. Mutual Fund Performance, Journal of Business, January 1966, pp. 119–138.

[6]. Henriques, Irene, and Perry Sadorsky. 2018. "Can Bitcoin Replace Gold in an Investment Portfolio?" Journal of Risk and Financial Management 11, no. 3: 48.

[7]. Bessler, W., Taushanov, G., & Wolff, D. (2021, May 29). Factor investing and asset allocation strategies: A comparison of factor versus sector optimization - Journal of Asset Management.

[8]. Yoshino, N., Taghizadeh-Hesary, F., & Otsuka, M. (2020, July 12). Covid-19 and optimal portfolio selection for investment in Sustainable Development Goals. Finance Research Letters.


Cite this article

Guan,S.;Jiang,H.;Zhou,M.;Liu,J. (2023). Is Bitcoin the 'Digit Gold'——A Potential Safe-haven Asset?. Advances in Economics, Management and Political Sciences,4,392-401.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About volume

Volume title: Proceedings of the 6th International Conference on Economic Management and Green Development (ICEMGD 2022), Part Ⅱ

ISBN:978-1-915371-17-1(Print) / 978-1-915371-18-8(Online)
Editor:Canh Thien Dang, Javier Cifuentes-Faura
Conference website: https://www.icemgd.org/
Conference date: 6 August 2022
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.4
ISSN:2754-1169(Print) / 2754-1177(Online)

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References

[1]. Wong, W. S., Saerbeck, D., & Delgado Silva, D. (2018, February 18). Cryptocurrency: A new investment opportunity? an investigation of the hedging capability of cryptocurrencies and their influence on stock, Bond and gold portfolios.

[2]. Corbet, S., Hou, Y. (G., Hu, Y., Larkin, C., & Oxley, L. (2020, July 7). Any port in a storm: Cryptocurrency safe-havens during the COVID-19 pandemic. Economics Letters.

[3]. Conlon, T., & McGee, R. (2020, May 24). Safe haven or risky hazard? bitcoin during the COVID-19 bear market. Finance Research Letters.

[4]. Hasan, M. B., Hassan, M. K., Rashid, M. M., & Alhenawi, Y. (2021, August 13). Are Safe Haven assets really safe during the 2008 global financial crisis and covid-19 pandemic? Global Finance Journal.

[5]. Sharpe, William F. Mutual Fund Performance, Journal of Business, January 1966, pp. 119–138.

[6]. Henriques, Irene, and Perry Sadorsky. 2018. "Can Bitcoin Replace Gold in an Investment Portfolio?" Journal of Risk and Financial Management 11, no. 3: 48.

[7]. Bessler, W., Taushanov, G., & Wolff, D. (2021, May 29). Factor investing and asset allocation strategies: A comparison of factor versus sector optimization - Journal of Asset Management.

[8]. Yoshino, N., Taghizadeh-Hesary, F., & Otsuka, M. (2020, July 12). Covid-19 and optimal portfolio selection for investment in Sustainable Development Goals. Finance Research Letters.