[Research Contribution] Green Cryptocurrencies and Geopolitical Risk: A Safe Haven in the Digital Age
5 May, 2026
Keywords: Cryptocurrency volatility; GARCH-M-GJR-LEV; geopolitical risk; green cryptocurrencies; safe-haven asset.
In the context of rising geopolitical risk, a research team from the University of Economics Ho Chi Minh City (UEH) analysed the relationship between global tensions and cryptocurrency market volatility. The study used data from 10 cryptocurrencies over the 2014–2023 period, combined with a sophisticated econometric model. The results show a negative correlation between geopolitical risk and the level of cryptocurrency volatility.
Rising Geopolitical Risk and the Investor’s Dilemma
In the context of deepening globalisation, geopolitical risk has increasingly become a critical factor shaping investment decisions and financial market dynamics. Factors such as conflicts, terrorism, and political tensions not only affect economic growth but also generate significant volatility across major markets, including equities, foreign exchange, and energy.
The past decade has witnessed a series of complex geopolitical events, ranging from the Russia-Ukraine conflict and tensions in the Middle East to terrorist attacks and strategic competition among nations. These developments have disrupted global supply chains, driven up energy prices, and exerted pressure on inflation, economic growth, and overall market confidence.
In such an environment, investors are compelled to seek assets capable of preserving value. Traditional currencies such as the Swiss franc, Japanese yen, and U.S. dollar have long been regarded as safe-haven assets. However, recent divergences in monetary policy and economic conditions have raised questions about their ability to maintain this role in the long term.
Cryptocurrencies: A New Asset at the Center of Debate
In recent years, cryptocurrencies have emerged as a new financial asset class with substantial market capitalisation and growing adoption. They are digital or virtual currencies based on cryptographic techniques, enabling transactions on decentralised networks without reliance on intermediaries. Currently, more than 1,600 cryptocurrencies are in circulation, including well-known ones such as Bitcoin, Bitcoin Cash, LTC, LINK, and Tether.
However, cryptocurrencies are still widely perceived as high-risk assets, characterised by significant price volatility and unpredictability. Most previous studies have focused on the impact of economic policy uncertainty on cryptocurrency markets, while the role of geopolitical risk has not been thoroughly examined. This highlights the need for further research that directly investigates the relationship between geopolitical factors and cryptocurrencies.
Research Approach and Gap Addressed
To address this gap, the study examines the relationship between geopolitical risk and cryptocurrency market volatility over the 2014–2023 period using daily data. A key feature of the approach is the application of the GARCH-M-GJR-LEV model (an advanced econometric method) which improves the accuracy of volatility estimation compared to traditional models. This framework allows for a clearer identification of how cryptocurrency markets respond to geopolitical shocks, while providing robust empirical evidence for both academic and practical purposes.
The findings indicate that geopolitical risk, including geopolitical acts and geopolitical threats, has a negative effect on cryptocurrency volatility. This implies that during periods of heightened uncertainty, the cryptocurrency market tends to become more stable (an attribute commonly associated with safe-haven assets).
Notably, this effect is stronger for green cryptocurrencies than for non-green ones, reflecting the growing importance of sustainability in financial markets. However, the safe-haven role of cryptocurrencies is not consistently observed, and primarily emerges during periods of elevated geopolitical risk.
Policy Implications and Investment Strategies
The study provides empirical evidence for investors to consider cryptocurrencies as a tool for preserving asset value during periods of heightened geopolitical risk, rather than viewing them solely as speculative assets. This implies that incorporating geopolitical risk into portfolio allocation strategies is essential to enhance risk-hedging effectiveness.
For policymakers, the findings suggest that cryptocurrencies should be recognised as a component of the financial system, thereby requiring regulatory frameworks that reflect their volatility and cross-border nature. In particular, the stronger response of green cryptocurrencies to geopolitical shocks indicates the need for policy directions that encourage sustainability-oriented assets, in line with long-term development goals.
In addition, the study offers implications for central banks and financial institutions in considering cryptocurrencies as a supplementary component in safe-haven asset selection and risk management strategies, especially in the context of increasing geopolitical tensions and monetary instability.
Read the full article Green Cryptocurrencies and Geopolitical Risk: A Safe Haven in the Digital Age HERE.
Authors: M.Sc. Hoang Thi Phuong Anh, Dr. To Cong Nguyen Bao, Tran Dinh Hoang – University of Economics Ho Chi Minh City.
This article is part of a series disseminating research and applied knowledge under the message “Research Contribution For All” carried out by UEH in collaboration with Khanh Hoa Newspaper and Radio-Television, with the aim of supporting the sustainable development of Khanh Hoa Province. UEH cordially invites readers to stay tuned for the next edition of the Scientific Knowledge bulletin.
News, photos: UEH
Voice: Thanh Kieu
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