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COVID-19 Cryptocurrency Investment: Wealth Disparities and Portfolio Diversification

Author

Listed:
  • Juliet Elu

    (Morehouse College)

  • Miesha Williams

    (Spelman College)

Abstract

The introduction of cryptocurrency and blockchain technology has provided many investors the option to engage in the market, diversify their portfolios, and accumulate wealth. The high return on cryptocurrency during the pandemic has served as an incentive for all ethnic groups to participate in the market. Cryptocurrency is perceived as a hedging instrument for wealth prospects across races during COVID-19. Considering the return on investment, to what extent is blockchain a good hedging instrument for minority investors? Using weekly trade price data from Yahoo Finance, market valuations from coinranking.com, and asset/equity variables from the Federal Reserve Bank, this paper examines investment strategies of different racial/ethnic groups in cryptocurrency during the pandemic in a panel data model from 2019 to 2021. Should investors use public coins such as Bitcoin and Ethereum as part of their investment portfolio mix during the pandemic? We find that an increase in the price of Bitcoin and other cryptocurrencies during the pandemic may repress the investment strategy for marginalized groups.

Suggested Citation

  • Juliet Elu & Miesha Williams, 2023. "COVID-19 Cryptocurrency Investment: Wealth Disparities and Portfolio Diversification," Journal of Economics, Race, and Policy, Springer, vol. 6(1), pages 53-59, March.
    • Handle: RePEc:spr:joerap:v:6:y:2023:i:1:d:10.1007_s41996-022-00108-6
    DOI: 10.1007/s41996-022-00108-6
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    References listed on IDEAS

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    1. Sean Foley & Jonathan R Karlsen & Tālis J Putniņš, 2019. "Sex, Drugs, and Bitcoin: How Much Illegal Activity Is Financed through Cryptocurrencies?," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1798-1853.
    2. Haoqian Zhang & Cristina Basescu & Bryan Ford, 2020. "Economic Principles of PoPCoin, a Democratic Time-based Cryptocurrency," Papers 2011.01712, arXiv.org.
    3. William A. Darity & Darrick Hamilton, 2017. "The Political Economy of Education, Financial Literacy, and the Racial Wealth Gap," Review, Federal Reserve Bank of St. Louis, vol. 99(1), pages 59-76.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Eichacker, Nina, 2024. "Cryptocurrency in Heterodox Economic Theory and Institutional Practice," SocArXiv 7kyrm, Center for Open Science.
    2. Eichacker, Nina, 2024. "Cryptocurrency in Heterodox Economic Theory and Institutional Practice," SocArXiv 7kyrm_v1, Center for Open Science.

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    More about this item

    Keywords

    Financial Economics; Blockchain; COVID-19; Portfolio diversification;
    All these keywords.

    JEL classification:

    • G0 - Financial Economics - - General
    • G1 - Financial Economics - - General Financial Markets
    • G4 - Financial Economics - - Behavioral Finance

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