Safe havens in the digital age: Cryptocurrencies and geopolitical risks

Anh Thi Phuong Hoang (), Bao Cong Nguyen To and Hoang Dinh Tran
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Anh Thi Phuong Hoang: University of Economic Ho Chi Minh City, Ho Chi Minh City, Vietnam
Bao Cong Nguyen To: University of Economic Ho Chi Minh City, Ho Chi Minh City, Vietnam
Hoang Dinh Tran: University of Economic Ho Chi Minh City, Ho Chi Minh City, Vietnam

HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, 2025, vol. 15, issue 3, 160-180

Abstract: This study examines the impact of geopolitical risks (GPR) on cryptocurrency volatility, with a focus on green and non-green cryptocurrencies. Geopolitical risks - stemming from conflicts, terrorism, and political tensions - have significant implications for financial markets and investment decisions, as highlighted by recent events such as the Russia-Ukraine war, Israel-Hamas conflict, tensions in the Korean Peninsula, China-Taiwan disputes, and US-UK actions against Houthi forces in the Red Sea. Using a dataset of 10 cryptocurrencies from 2014 to 2023, the analysis employs the GARCH-M-GJR-LEV econometric model to investigate volatility dynamics. The results show a negative correlation between geopolitical risks and cryptocurrency volatility, indicating that as geopolitical tensions increase, cryptocurrency markets tend to stabilize, suggesting their potential as safe havens. Moreover, the findings reveal that green cryptocurrencies are more resilient to geopolitical shocks than non-green ones, highlighting the rising importance of sustainability in financial markets. This research contributes to the literature by offering insights into the differential responses of green and non-green cryptocurrencies to geopolitical events. The findings have practical implications for investors looking for hedging tools during periods of heightened geopolitical uncertainty, as well as for policymakers aiming to understand the broader impacts of geopolitical dynamics on emerging financial markets like cryptocurrencies.

Keywords: cryptocurrencies volatility; GARCH-M-GJR-LEV; geopolitical risk; green cryptocurrencies; safe haven asset (search for similar items in EconPapers)
JEL-codes: F37 F45 F65 G14 G32 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:bjw:econen:v:15:y:2025:i:3:p:160-180

DOI: 10.46223/HCMCOUJS.econ.en.15.3.3875.2025

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