Is Bitcoin a better safe-haven asset for individual investors than Gold? – Evidence from sanctioned Russia

Lu Zhang and Christian Wolff

No 17745, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Extensive research on safe-haven assets has been conducted in the literature. An important finding is that safe-haven assets are frequently used by institutional investors, such as pension funds and investment banks, to ride out high volatility. However, the issue of whether individual investors can benefit from it during a financial crisis has not been adequately addressed. Using the case of sanctioned Russia, we attempt to study whether Bitcoin as a decentralized asset can play a more useful role than gold to protect individual investors when the majority of safe-haven assets are restricted from transactions. Our main results show that both assets exhibit intraday weak safe-haven properties against the ruble. However, gold saw a waning trend compared with its historical performance, whereas Bitcoin’s capability increased during this period. Further sentiment analysis demonstrates Russian investors’ positive attitudes regarding Bitcoin boosting its price in response to the ruble’s depreciation. The return on gold is more likely to be impacted by international investors who are concerned about global uncertainties

JEL-codes: G11 (search for similar items in EconPapers)
Date: 2022-12
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