Study: Bitcoin Hedges Global Uncertainty

A newly released study on the relationship between bitcoin and global uncertainty finds that bitcoin acts positively to uncertainty. Analyzing a lengthy period from the 17th of March, 2011, to the 7th of October, 2016 by using the VIX index, a widely used key market risk indicator that reflects market sentiment and investor expectation of 14 countries, Brazil, Canada, China, France, Germany, India, Japan, Mexico, Russia, South Africa, Sweden, Switzerland, the UK and the US, the study concludes:

“Bitcoin is shown to serve as a hedge against uncertainty at the extreme ends of the Bitcoin market and global uncertainty, but at shorter investment horizons. Therefore, short-horizon investment in Bitcoin can help investors hedge global equity market uncertainty, especially when the market is functioning in bear and bull regimes and also when uncertainty is either low or high.”

By using a quantile regression framework as well as a well-known method of wavelets to decompose Bitcoin returns into its various investment horizons, the study was able to provide a more nuanced view in analyzing the effect of

Read more ... source: CryptoCoinsNews

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