Effect Of Geopolitical Risk On Bitcoin’s Price From 2016-2021: Comparative Analysis Pre-During Covid-19 Pandemic Period

Mey Frida Yosefa Bangun (1) , Dezie Leonarda Warganegara (2)
(1) School of Accounting, Bina Nusantara University, Jakarta, Indonesia , Indonesia
(2) School of Accounting, Bina Nusantara University, Jakarta, Indonesia , Indonesia

Abstract

Purpose of the study: The study aims to the effects of the geopolitical risks (GPR) and its components indexes on Bitcoin's price from January 1, 2016, to December 31, 2021, and how covid-19 affect the GPR risk and its components on bitcoin's price.


Methodology: We performed quantitative data analysis techniques such as OLS (Ordinary Least Square) and QQ Regression. The study data covers January 1, 2016, to December 31, 2021.


Main Findings: OLS estimations show that Bitcoin's prices are positively and negatively related and statistically insignificant to the GPR and its components before and during the COVID-19 pandemic, respectively. However, the findings of the Quantile estimations state that the effects are positive and statistically significant at the higher quantiles of bitcoin's prices of both the GPR and its component, i.e., GPRA before and during the COVID-19 pandemic.


Research limitations/implications: Our paper has limitations related to the adopted methodology. We use bitcoin as the dependent variable and only use two estimation models: the OLS model and Quantile Regression.


Novelty/Originality of this study: This research is expected to be used as a source of information and input for investors in deciding to invest in the face of another economic recession ahead. Our findings align with Bouri et al. (2017b) and Aysan et al. (2019), which illustrate that the effects of geopolitical risk and uncertainty indicators on Bitcoin's price are negative in the baseline findings. We enhance the previous findings to observe the positive impact of geopolitical risks and their components, the Bitcoin's price at the higher quantiles, then compare analysis pre-during Covid-19.

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Authors

Mey Frida Yosefa Bangun
mey.bangun002@binus.ac.id (Primary Contact)
Dezie Leonarda Warganegara
Bangun, M. F. Y., & Warganegara, D. L. (2023). Effect Of Geopolitical Risk On Bitcoin’s Price From 2016-2021: Comparative Analysis Pre-During Covid-19 Pandemic Period. Innovation Journal of Social Sciences and Economic Review, 5(1), 11–18. https://doi.org/10.36923/ijsser.v5i1.180

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