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Any port in a storm: Cryptocurrency safe-havens during the COVID-19 pandemic

Shaen Corbet (), Hou, Yang (Greg), Yang Hu, Charles Larkin () and Les Oxley ()

Economics Letters, 2020, vol. 194, issue C

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 historiccrises.

Keywords: COVID-19; Pandemic; Sentiment; Cryptocurrency; Safe-haven; Financial crisis (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.econlet.2020.109377

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