Bitcoin and Gold: The Unlikely Heroes of Market Stability

During tough times, like the COVID-19 pandemic and the 2022 Russia-Ukraine conflict, investors often look for safe places to put their money. Two big names in this game are Bitcoin and gold. But what about other types of investments, like those in the blue economy or green finance? How do they fare during these crises? Imagine you're a sailor trying to navigate rough seas. You need a sturdy ship and a reliable compass. In this story, Bitcoin and gold act like those reliable tools. Researchers used three different models to figure out how well Bitcoin and gold can protect investments. They looked at how well they could diversify investments, act as a safe-haven, or hedge against losses. These models are like different maps helping us understand the landscape. They are called DCC, ADCC, and GO-GARCH. The GO-GARCH model, in particular, stood out as a better guide, showing that gold is a strong ally for certain investments, while Bitcoin shines for others. During these crises, Bitcoin showed it could be a reliable safe-haven, especially against blue economy assets like BJLE and OCEN. But gold had its own strengths, providing a safe-haven for investments in BJLE and FAN. The GO-GARCH model was clear: gold is a top choice for diversifying and protecting investments in GNR and TAN. Meanwhile, Bitcoin proved more effective for blue and green assets. This might leave you wondering, "Why does this matter? " Well, it's all about making smart choices. Investors can use this knowledge to navigate market uncertainties, especially when it comes to sustainable investments. The key takeaway is understanding that Bitcoin and gold have different roles, and both can be crucial in managing a portfolio. The findings highlight the importance of considering Bitcoin and gold as part of a diversified investment strategy. Whether you're looking to hedge against losses or find a safe haven, having a mix of these assets in your portfolio can make a big difference. But remember, it's not just about Bitcoin and gold. Other assets, like those in the blue economy and green finance, also have their place. The real challenge is figuring out how to balance all these options effectively. This is especially true during times of crisis, when markets can be unpredictable and volatile. The GO-GARCH model's insights can help investors make more informed decisions, ensuring they are better prepared for whatever comes their way.