Any Port in a Storm: Cryptocurrency Safe-Havens during the COVID-19 Pandemic

13 Pages Posted: 27 May 2020

See all articles by Shaen Corbet

Shaen Corbet

Dublin City University ; University of Waikato - Management School

Greg Hou

University of Waikato - Management School

Yang Hu

University of Waikato - Management School

Charles James Larkin

Institute for Policy Research (IPR), University of Bath; Trinity College Dublin

Les Oxley

University of Waikato - Department of Economics and Finance; University of Waikato

Date Written: May 25, 2020

Abstract

Controlling for the polarity and subjectivity of social media data based on the development of the COVID-19 outbreak, we analyse the relationships between the largest cryptocurrencies and such time-varying realisation as to the scale of the economic shock centralised within the rapidly-escalating pandemic. We find evidence of significant growth in both returns and volumes traded, indicating that large cryptocurrencies acted as a store of value during this period of exceptional financial market stress. Further, cryptocurrency returns are found to be significantly influenced by negative sentiment relating to COVID-19. While not only providing diversification benefits for investors, results suggest that these digital assets acted as a safe-haven similar to that of precious metals during historic crises.

Keywords: COVID-19; Pandemic; Sentiment; Cryptocurrency; Safe-haven; Financial Crisis

Suggested Citation

Corbet, Shaen and Hou, Greg and Hu, Yang and Larkin, Charles James and Oxley, Les, Any Port in a Storm: Cryptocurrency Safe-Havens during the COVID-19 Pandemic (May 25, 2020). Available at SSRN: https://ssrn.com/abstract=3610461 or http://dx.doi.org/10.2139/ssrn.3610461

Shaen Corbet (Contact Author)

Dublin City University ( email )

Dublin 9
Ireland

University of Waikato - Management School ( email )

Hamilton
New Zealand

Greg Hou

University of Waikato - Management School ( email )

Hamilton
New Zealand

Yang Hu

University of Waikato - Management School ( email )

Te Raupapa
Private Bag 3105
Hamilton, 3240
New Zealand

Charles James Larkin

Institute for Policy Research (IPR), University of Bath ( email )

10 West
Claverton Down
Bath, BA2 7AY
United Kingdom

Trinity College Dublin ( email )

AAP College Green
Dublin 2
Ireland

Les Oxley

University of Waikato - Department of Economics and Finance ( email )

Private Bag 3105
Hamilton, 3105
New Zealand

University of Waikato ( email )

Hamilton
New Zealand

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