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The effects of geopolitical uncertainty on cryptocurrencies and other financial assets

Authors
  • Kyriazis, Νikolaos A.1
  • 1 University of Thessaly, 28th October 78 Street, Volos, 38333, Greece , Volos (Greece)
Type
Published Article
Journal
SN Business & Economics
Publisher
Springer International Publishing
Publication Date
Nov 02, 2020
Volume
1
Issue
1
Identifiers
DOI: 10.1007/s43546-020-00007-8
Source
Springer Nature
Keywords
License
Yellow

Abstract

This survey reviews the empirical literature concerning the impacts of geopolitical uncertainty as expressed by the highly innovative Geopolitical Risk Index (GPR) by Cardara and Iacoviello (2019). Focus is made on the effects on cryptocurrencies, oil, gold and stock markets. Findings reveal that the GPR index is negatively influential on returns and volatility of oil prices while increase mostly the volatility of stock markets mainly at lower quantiles and weakens the linkage between oil and stock markets. Moreover, this index is a powerful predictor of Bitcoin returns and volatility and is of major importance for determining the diversifying or hedging character of Bitcoin and major cryptocurrencies in portfolios. This sheds light on yet weakly known aspects of geopolitical uncertainty on markets and enables investors to take decisions.

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