Do NFTs act as a good hedge and safe haven against Cryptocurrency fluctuations?

Anoop S Kumar and Steven Raj Padakandla

Finance Research Letters, 2023, vol. 56, issue C

Abstract: In this study, we test the hedge and safe haven properties of NFTs against Bitcoin and Ethereum market fluctuations in the backdrop of COVID-19 and the Russia-Ukraine war. We employ daily returns of Bitcoin, Ethereum, and four NFTS, namely Decentraland, Cryptopunks, Cryptokitties, and SuperRare, from 04 April 2018 to 7 July 2022. For analytical purposes, we estimate dynamic hedge effectiveness and wavelet quantile correlations. The dynamic hedge effectiveness results confirm the NFTs' hedge ability against Bitcoin. The WQC results show that NFTs offer short, medium, and long-run hedge properties and short run safe haven property against Bitcoin. Further, we show that NFTs are at best a short to medium term diversifier against Ethereum fluctuations.

Keywords: Non-fungible tokens; Cryptocurrency; Hedge; Safe haven; Portfolio diversification; COVID-19; Russia-Ukraine war (search for similar items in EconPapers)
JEL-codes: C58 G11 G15 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:56:y:2023:i:c:s1544612323005032

DOI: 10.1016/j.frl.2023.104131

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