From Bullion to Blockchain: Testing the ‘Digital Gold’ Hypothesis for Bitcoin
Abstract/Description
There has been a rising debate among block chain enthusiasts and traditionalists from quiet a long time whether the most dominant cryptocurrency Bitcoin, could serve as a safe heaven during difficult times as traditional gold does and claim the title of digital gold or it is just a speculative asset like any other option available in the financial market. From the day it was introduced in 2009, the dominant cryptocurrency has been gaining value due to its increasing adoption and limited supply.
This study examines if Bitcoin functions as a safe haven asset in general or within the cryptocurrency universe during periods of high volatility. Using monthly data from 2015 to 2024, we examine the relationship between Bitcoin dominance and the VIX index, as proxy for investor fear. While applying the time-series techniques including OLS regression, and two-sample t-tests, we found no significant relationship between VIX Index and Bitcoin dominance. However, we noted that market share of Bitcoin know as dominance, decreases at times of high fear while significant capital flight is observed in other cryptocurrencies which are most likely stable coins. Our findings challenge the perception about Bitcoin as digital gold as it does not exhibit traditional safe-haven characteristics.
Track
Finance
Session Number/Theme
Finance - Session I
Start Date/Time
13-6-2025 2:15 PM
End Date/Time
6-2025 3:55 PM
Location
MCS – 3 AMAN CED Building
Recommended Citation
Abid, S. (2025). From Bullion to Blockchain: Testing the ‘Digital Gold’ Hypothesis for Bitcoin. IBA SBS 4th International Conference 2025. Retrieved from https://ir.iba.edu.pk/sbsic/2025/program/2
COinS
From Bullion to Blockchain: Testing the ‘Digital Gold’ Hypothesis for Bitcoin
MCS – 3 AMAN CED Building
There has been a rising debate among block chain enthusiasts and traditionalists from quiet a long time whether the most dominant cryptocurrency Bitcoin, could serve as a safe heaven during difficult times as traditional gold does and claim the title of digital gold or it is just a speculative asset like any other option available in the financial market. From the day it was introduced in 2009, the dominant cryptocurrency has been gaining value due to its increasing adoption and limited supply.
This study examines if Bitcoin functions as a safe haven asset in general or within the cryptocurrency universe during periods of high volatility. Using monthly data from 2015 to 2024, we examine the relationship between Bitcoin dominance and the VIX index, as proxy for investor fear. While applying the time-series techniques including OLS regression, and two-sample t-tests, we found no significant relationship between VIX Index and Bitcoin dominance. However, we noted that market share of Bitcoin know as dominance, decreases at times of high fear while significant capital flight is observed in other cryptocurrencies which are most likely stable coins. Our findings challenge the perception about Bitcoin as digital gold as it does not exhibit traditional safe-haven characteristics.
