“Shiny” crypto assets: A systemic look at gold-backed cryptocurrencies during the COVID-19 pandemic

Akanksha Jalan (1) , Roman Matkovskyy (1) , Larisa Yarovaya (2)

1 ESC [Rennes] - ESC Rennes School of Business
2 SBS - Southampton Business School

In this paper, we empirically analyse the performance of five gold-backed stablecoins during the COVID-19 pandemic and compare them to gold, Bitcoin and Tether. In the digital assets' ecosystem, gold-backed cryptocurrencies have the potential to address regulatory and policy concerns by decreasing volatility of cryptocurrency prices and facilitating broader cryptocurrency adoption. We find that during the COVID-19 pandemic, gold-backed cryptocurrencies were susceptible to volatility transmitted from gold markets. Our results indicate that for the selected gold-backed cryptocurrencies, their volatility, and as a consequence, risks associated with volatility, remained comparable to the Bitcoin. In addition, gold-backed cryptocurrencies did not show safe-haven potential comparable to their underlying precious metal, gold.

Mots clés: Stablecoins; Cryptocurrencies; Gold-backed cryptocurrencies; COVID-19; Gold

Domaines: Économie et finance quantitative [q-fin]; Finance [q-fin.GN]

Akanksha Jalan, Roman Matkovskyy, Larisa Yarovaya. “Shiny” crypto assets: A systemic look at gold-backed cryptocurrencies during the COVID-19 pandemic. International Review of Financial Analysis, 2021, 78, pp.101958. ⟨10.1016/j.irfa.2021.101958⟩. ⟨hal-03512893⟩