The Coronavirus Lesson: Do Cryptocurrencies offer a Counter-cyclical Hedge?

CBRI Working Papers: Notes on the 21st Century, 2020

13 Pages Posted: 1 Apr 2020 Last revised: 3 Apr 2020

See all articles by Usman W. Chohan

Usman W. Chohan

UNSW Business School; Critical Blockchain Research Initiative (CBRI); Centre for Aerospace & Security Studies (CASS)

Date Written: Marchl 26, 2020

Abstract

The price of cryptocurrencies has been a contentious practitioner and academic question, on one hand because of its nuanced relationship to traditional finance (with challenges of mainstreaming), and on the other hand regarding its role as a hedge against hyperinflation, financial crises, and excessive liquidity priming. This working paper tests the claim of whether cryptocurrencies truly offer a hedge against traditional instruments during market turmoil, using data from the initial phase of the 2020 coronavirus recession. The findings suggest that cryptocurrencies do not adequately adhere to the counter-cyclical hedging argument, nor do they manifest their cryptoanarchist underpinnings during market turmoil.

Keywords: COVID19, coronavirus, crisis, cryptocurrencies, bitcoin, blockchain, recession

Suggested Citation

Chohan, Usman W., The Coronavirus Lesson: Do Cryptocurrencies offer a Counter-cyclical Hedge? (Marchl 26, 2020). CBRI Working Papers: Notes on the 21st Century, 2020. Available at SSRN: https://ssrn.com/abstract=3566265 or http://dx.doi.org/10.2139/ssrn.3566265

Usman W. Chohan (Contact Author)

UNSW Business School ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia

Critical Blockchain Research Initiative (CBRI) ( email )

Centre for Aerospace & Security Studies (CASS) ( email )

Islamabad
Pakistan

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