Cryptocurrency dynamics during global crises: Insights from Bitcoin’s interplay with traditional markets

Abstract

This study delves into the differences between traditional financial markets, as proxied by their corresponding future contracts, and the cryptocurrency market, focusing on Bitcoin, during major global events: the COVID-19 pandemic, the Russia-Ukraine war, and the Israel–Palestine conflict. It reveals Bitcoin’s increased trading volume post-COVID-19, highlighting its appeal as a digital safe haven. This trend persists during subsequent crises, suggesting a strategic shift towards cryptocurrencies as diversification tools. Despite volume fluctuations, Bitcoin’s price stability reflects investor confidence in its long-term viability. The significant change in EuroStoxx 50 returns during the Israel–Palestine conflict, highlights localized geopolitical influences on markets. The study underscores the importance of considering both global and regional factors in investment decisions. It emphasizes cryptocurrencies’ growing significance in the global financial market, particularly during crises, and suggests further exploration into investor behavior and regulatory effects. Understanding these dynamics is crucial for navigating the evolving financial landscape.