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Can altcoins act as hedges or safe-havens for Bitcoin?

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  • Li, Yi
  • Lucey, Brian
  • Urquhart, Andrew

Abstract

Bitcoin remains the most popular cryptocurrency and has attracted significant research attention, especially in the hedging and safe-haven literature. As many investors in bitcoin are concentrated heavily in cryptocurrencies as opposed to other assets, a question arises whether alternative cryptocurrencies (altcoins) can used as safe-havens and hedges against Bitcoin? We find that only meme coins offer hedging benefits but a wider range – Defi, meme coins, smart contracts, metaverse and privacy cryptocurrencies – can all act as safe-havens against bitcoin. We further show that their ability to act as hedges and safe-havens varies depending on whether the market is in a bubble or non-bubble period.

Suggested Citation

  • Li, Yi & Lucey, Brian & Urquhart, Andrew, 2023. "Can altcoins act as hedges or safe-havens for Bitcoin?," Finance Research Letters, Elsevier, vol. 52(C).
    • Handle: RePEc:eee:finlet:v:52:y:2023:i:c:s1544612322005372
    DOI: 10.1016/j.frl.2022.103360
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    References listed on IDEAS

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    More about this item

    Keywords

    Bitcoin; Hedge; Safe-haven; DeFI; Cryptocurrencies;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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