Research: Bitcoin is a tool for hedging geopolitical risks

One of the earliest academic papers that studied the relationship between geopolitical risk (GPR) and the price of Bitcoin pointed out that there is a significant correlation between the two. The researchers further concluded that only Bitcoin is associated with the GPR index of Caldara and Iacoviello (2018), which reflects the level of geopolitical risk by calculating geopolitical events reported by major media around the world.

This thesis studies five cryptocurrencies including BTC, ETH, LTC, XRP, and XLM, of which ETH is the least relevant. "Of the 5 cryptocurrencies, the most affected are LTC (80), XRP (74), and BTC (71), with the proportion of days being 3.38%, 3.26%, and 3.00%, respectively. At the same time, ETH is the most The unaffected cryptocurrency has only changed 38 times and the proportion of days is 2.47% (Note: The data time of ETH is about 4 years and 3 months, including 1539 observations; the data time of BTC is April 30, 2013 (To October 31, 2019). Many changes have occurred between 2016 and 2017. "The correlation between Bitcoin and GPR shows that in an era of increasing geopolitical risks, Bitcoin is becoming increasingly important as a" safe haven " , Can replace the ineffectiveness of traditional economic and financial systems, such as Brexit, Venezuela sanctions, the US-Iran conflict, etc. As a result, investors are deliberately turning to Bitcoin during geopolitical events.