How Good is the Bitcoin as an Alernative Asset for Hedging

Abstract

In recent years,the cryptocurrencies have received broader attention and adoption from the investing public. The price appreciation in value of digital currencies has increased to many folds that captivated from individual investors to wall street banks and high frequency traders.An important feature of bitcoin is that they are not backed by any central bank unlike the traditional currencies. The supply of these currencies are limited to a design of protocol (Bouri et al., 2017). The Bitcoin is one of the most popular cryptocurrencies and accounts about 41% of the cryptocurrencies capitalization (Katsiampa,2017).Bitcoin was invented in 2009 by a group of people in the name of Sathoshi Nakamoto (Briere et al., 2015).Since its introduction, bitcoin has grown steeper and sweeping the investors worldwide. The value of Bitcoin grew from US $ 6 billion (Bouri et al.,2017) in 2015 to US $ 167 billion in November 2017(Source: CoinMarketCap) indicating the tremendous growth.