Is Bitcoin a Safe-haven Against Geopolitical Events: An Analysis Based on Russian-Ukrainian Conflict

Simeng Liu

doi:10.54097/hbem.v7i.6957

Authors

Simeng Liu

DOI:

https://doi.org/10.54097/hbem.v7i.6957

Keywords:

Bitcoin, Geopolitical, Safe haven, VAR, ARMA-GARCH.

Abstract

Bitcoin, as a virtual cryptocurrency with both property of investment and currency, is widely investigated for its potential as a safe haven in world volatility. This paper, using classic time series model VAR and ARMA-GARCH, aims to study whether Bitcoin has safe-haven value in geopolitical events, which is based on the Russia-Ukraine conflict. By quantifying the impact of Russia-Ukraine conflict with crude oil prices and considered logarithmic yield, this study finds out both the positive and negative effects to Bitcoin yield from temporary shocks and long-term fluctuations of geopolitical. The VAR accumulation shows that geopolitics will have cumulative net positive impacts on Bitcoin's yield in the short term, that is, Bitcoin can be seen as a short-term safe haven for investors with brief profit needs. However, more results show that the impact of geopolitics on Bitcoin is difficult to determine, and the long-term impact is close to zero. The inadequate evidence of safe-haven value means that long-term investors need to consider Bitcoin cautiously. Based on the current background of Russia-Ukraine conflict, the study can both promote the academic understanding of Bitcoin’s value in geopolitical conflict, and help the investors make the right choice in world volatility.

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