Is cryptocurrency a new digital gold? Evidence from the macroeconomic shocks in selected emerging economies

Abstract

Purpose

The purpose of the study is to analyze the hedging abilities of the cryptocurrencies vis-à-vis gold against macroeconomic shocks in four emerging economies, India, China, Brazil and Russia.

Design/methodology/approach

Using the monthly data from January 2013 to April 2023, the paper analyses the response of Cryptocurrencies vis-à-vis gold prices to three different macroeconomic shocks, namely, the economic policy uncertainty shock, the financial uncertainty shock and the inflation shock, within a VAR framework with the help of the Generalized Impulse Response Function.

Findings

Both gold and cryptocurrencies have limited hedging abilities against macroeconomic shocks across countries. In India, bitcoin has become the new digital gold, while in China, it is not bitcoin but rather gold that retains its hedging abilities. Neither bitcoin nor gold, Binance Coin or Cardano, are found to be the new digital gold in Brazil and Russia.

Originality/value

The paper compares the top nine cryptocurrencies with the traditional asset gold in terms of their hedging potential against macroeconomic shocks in emerging countries.

Citation

Majumder, S.B. (2025), "Is cryptocurrency a new digital gold? Evidence from the macroeconomic shocks in selected emerging economies", Journal of Economic Studies, Vol. 52 No. 1, pp. 88-103. https://doi.org/10.1108/JES-08-2023-0410