The Impact of the COVID-19 Pandemic on Bitcoin Prices

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This study compares the impacts of the COVID-19 pandemic on Bitcoin and gold prices from January 4, 2020, to October 8, 2021. Wavelet analysis is employed since it is currently one of the most popular methods for investigating correlations. The results show that the number of confirmed cases of COVID-19 had a positive impact on Bitcoin price during the first 125 days of the pandemic, with a correlation frequency band centering around 18–68 days. In contrast, COVID-19 has a similar but much smaller positive effect on the gold price at the first 28 days of the pandemic, with a correlation frequency band centering around 8–18 days. Therefore, the positive correlation between the COVID-19 pandemic cases with Bitcoin price lasts longer than that with gold price; the same holds for the frequency span. We also find that the number of COVID-19 confirmed cases negatively affects gold prices during a relatively short period, a pattern which we do not observe for Bitcoin during the same period. Our results provide guidance for investors who might use Bitcoins to hedge their portfolio risks and policymakers who strive to evaluate the impact of the COVID-19 pandemic on financial markets.

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Eurasian Studies in Business and Economics

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