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HomeMoneyIs Bitcoin Still A Good Hedging Option With COVID-19?

Is Bitcoin Still A Good Hedging Option With COVID-19?

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According to the official statistics from the WHO, there have been more than 87.6 million cumulative confirmed cases of COVID-19, with more than 1.9 million deaths as of January 2021. (WHO). The contagiousness of the disease has far-reaching consequences for healthcare institutions, the real economy, and the financial sector throughout the world (1, 2). Hanif et al. (3) even claim that the financial and economic effects of the Covid-19 epidemic will be greater than those of the 2008 financial crisis (GFC). Economic activity and financial markets worldwide have been stalled because of the Covid-19 epidemic. As a result, major nations have adopted the expansionary monetary strategy to help the economy weather the effects of Covid-19. For more information about Ethereum cryptocurrency.

Due to the recent Covid-19 pandemic, the Bitcoin market has become a center of attention for academics. Focusing on the links between the futures and spot markets for Bitcoin, this essay will help readers better understand the dynamics between the two.

The empirical results reveal that the spot and futures markets (1) are intertwined, (2) that there is turbulence spillover between the two markets, and (3) that Bitcoin futures may effectively manage risks in the spot market since the HE value is comparable to 0.6446.

Researchers find that the initial conclusion that Bitcoin futures may be utilized to manage the risk in the Bitcoin spot market still stands after adjusting for the impact of COVID-19. Finally, we examine the feasibility of using gold futures to hedge the Bitcoin spot market. For the purpose of illustrating how to use Bitcoin futures, we manipulate the markets for other cryptocurrencies. The empirical results of this study will be beneficial for the Bitcoin market.


From the beginning of 2016, prices steadily rose, eventually reaching over $900 by year’s end.

10 After breaking $2,000 in the middle of May, the price of Bitcoin exploded to a record high of $19,345.49 on December 15. In 2017, it had been trading at about $1,000. To compete with Bitcoin, 11 additional cryptocurrencies were developed and adopted by investors, governments, economists, and scientists.

Bitcoin spot market

In 2018, the price of Bitcoin rose and fell sharply, but in 2019, it was largely flat, with occasional spikes. For instance, in June of this year, trading volume and price spiked, eventually going beyond $10,000. In contrast, by the middle of December 12, it had dropped to $6,635.84.

In 2020, the COVID-19 epidemic caused the economy to collapse. The value of Bitcoin exploded. As 2018 began, the value of a single bitcoin was $6,965.72.

Bitcoin’s price was $19,157.16 as of the end of trade on November 23.


After failing to break the $40,000 barrier until January 7, 2021, Bitcoin’s price exploded in the first week of the new year. By April 12, 2021, Bitcoin’s price had risen to a record high of $63,558 thanks to the support of large financial institutions.

On July 19, 2021, the price dropped to $29,796; it dropped 50% from the spring. However, a massive downturn brought the price down to its final value of $40,710 around two weeks later.

On 11/10/2021, Bitcoin hit a new all-time high of $68,789 before settling at $64,995. Bitcoin’s price dropped to $46,164 in the middle of December 2021. As concerns about inflation and the appearance of the COVID-19 version of Omicron persisted, the price began to fluctuate more wildly. The bitcoin price remained downward from January to May 2022, hitting a high of $47,445 at the end of March before dropping to a low of $28,305 on May 11. The price of cryptocurrency fell dramatically on June 13.

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Due to the recent COVID-19 pandemic, Bitcoin has been a subject of study. This research contributes new knowledge by examining the ties between the spot and futures markets for Bitcoin. This study examines the VAR-DCC-GARCH model for dynamic correlation and the VAR-BEKK-GARCH model for volatility spillover. One hedging approach is proposed and evaluated based on the VAR-BEKK-GARCH model’s estimate findings. According to empirical research, neither the spot nor the futures markets for Bitcoin are significantly different from conventional markets.

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