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ECONOMY: A Hedge Against Geopolitical Risk?

BITCOIN – A Hedge Against Geopolitical Risk? By: Iain Fraser – Consultant Editor Malaga Technology Centre So is Bitcoin really a hedge against Geopolitical Risk? Steve Anderrson explores the links in his latest piece he uncovers a recent study has shown Bitcoin as a hedge fund that is against geopolitical risk. The very first research paper that studied the relation of Bitcoin and Geopolitical risk (GPR) has been published, and the paper shows that there is a very significant relationship between the two. The conclusion in the research paper is that only bitcoin has been correlated to the GPR index of Caldara and Iacoviello of the year 2018. This index shows the level of geopolitical risk by being able to calculate the number of geopolitical events that occurred around the globe and appeared in the news. It takes all the leading newspapers of the world to use their reporting as it’s the source of information. The research had included five cryptocurrencies in its study, and these included Bitcoin, Litecoin, XRP, Ethereum, and Stellar. The results from the study show that the least correlated crypto to geopolitical events is Ethereum (ETH). The research paper said that out of the cryptocurrencies that they kept understudy the jumpiest cryptocurrencies are Litecoin (80), Ripple(74), Bitcoin (71), whilst representing 3.38 percent, 3.26 percent and 3.00 percent of the days. On the other hand, the least jumpy crypto, Ethereum, has only 38 jumps and represent 2.47 percent of the days in total. When the data of Bitcoin, Litecoin, and Ethereum are limited to four years and three months, most of the jumps have been made in the years of 2016-17. Because of it’s open and code nature, Bitcoin probably has reacted faster than all the other assets that are because of it’s global nature. The global nature of Bitcoin basically means that a small fruit seller can also trade on their laptop or even the villagers of any village can trade on the computers of a young man who has an internet connection if they don’t have a connection themselves. About Steve Anderrson Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain. 


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