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The effects of geopolitical uncertainty on cryptocurrencies and other financial assets

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  • Νikolaos A. Kyriazis

    (University of Thessaly)

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.

Suggested Citation

  • Νikolaos A. Kyriazis, 2021. "The effects of geopolitical uncertainty on cryptocurrencies and other financial assets," SN Business & Economics, Springer, vol. 1(1), pages 1-14, January.
    • Handle: RePEc:spr:snbeco:v:1:y:2021:i:1:d:10.1007_s43546-020-00007-8
    DOI: 10.1007/s43546-020-00007-8
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    Cited by:

    1. Singh, Sanjeet & Bansal, Pooja & Bhardwaj, Nav, 2022. "Correlation between geopolitical risk, economic policy uncertainty, and Bitcoin using partial and multiple wavelet coherence in P5 + 1 nations," Research in International Business and Finance, Elsevier, vol. 63(C).
    2. Faheem Aslam & Paulo Ferreira & Haider Ali & Ana Ercília José, 2022. "Application of Multifractal Analysis in Estimating the Reaction of Energy Markets to Geopolitical Acts and Threats," Sustainability, MDPI, vol. 14(10), pages 1-23, May.
    3. Mustafa Tevfik Kartal & Mustafa Kevser & Fatih Ayhan, 2023. "Asymmetric effects of global factors on return of cryptocurrencies by novel nonlinear quantile approaches," Economic Change and Restructuring, Springer, vol. 56(3), pages 1515-1535, June.
    4. Cheng, Jiyang & Tiwari, Sunil & Khaled, Djebbouri & Mahendru, Mandeep & Shahzad, Umer, 2024. "Forecasting Bitcoin prices using artificial intelligence: Combination of ML, SARIMA, and Facebook Prophet models," Technological Forecasting and Social Change, Elsevier, vol. 198(C).
    5. Almeida, José & Gaio, Cristina & Gonçalves, Tiago Cruz, 2024. "Crypto market relationships with bric countries' uncertainty – A wavelet-based approach," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    6. Tin Hei Alpha Yuen & Wai Kee Thomas Yuen, 2022. "Relationship Between Geopolitical Risk In Major Oil Producing Countries and Oil Price," International Journal of Energy Economics and Policy, Econjournals, vol. 12(5), pages 117-123, September.
    7. Nikolaos A. Kyriazis, 2021. "The Nexus of Sophisticated Digital Assets with Economic Policy Uncertainty: A Survey of Empirical Findings and an Empirical Investigation," Sustainability, MDPI, vol. 13(10), pages 1-25, May.

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    More about this item

    Keywords

    Geopolitical risk index; Bitcoin; Cryptocurrency; Stock; Oil; Survey;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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