Can cryptocurrencies be a hedging tool? Evidence from the Turkish stock market

Erkan Ustaoglu and Idris Geckil

Macroeconomics and Finance in Emerging Market Economies, 2025, vol. 18, issue 3, 541-552

Abstract: The study examines the hedge properties of BTC, ETH, and BNB for the Istanbul Stock Exchange 100 Index (XU100). Investors who add cryptocurrencies to XU100-only portfolios reduce risks by 12.10% to 18.60%. Results show that during global events like COVID-19 and the Russia-Ukraine war, the hedge effectiveness of cryptocurrencies is low. However, during Turkey-specific events such as the Pastor Brunson currency shock, the swap crisis, the dismissal of Central Bank Governor Naci Ağbal, irrational interest rate cuts, the announcement of the currency-protected deposit system, and the February 6 earthquake, the hedging properties of cryptocurrencies against the XU100 index significantly improve.

Date: 2025
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DOI: 10.1080/17520843.2024.2419764

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