Introduction
Periods of geopolitical tension such as wars, territorial disputes and diplomatic crises often push investors to look for assets that can preserve value. Traditionally, , the Swiss franc and U.S. Treasuries have played this role. Over the last few years, and other cryptocurrencies have been increasingly discussed as potential safe havens or at least as tools for diversification in times of instability. This article examines market evidence and academic research to evaluate whether cryptocurrencies are actually fulfilling that role.
Key Concepts
Before analyzing the data, it is important to highlight some measures that are frequently used:
Geopolitical Risk (GPR) Index: Developed by Dario Caldara and Matteo Iacoviello, this index tracks geopolitical tensions through media references to events such as wars or diplomatic disputes.
Economic Policy Uncertainty (EPU) Index: This index measures uncertainty in economic policy through news coverage, tax expirations and other events.
Volatility Models (such as GARCH): These models estimate how asset returns react to shocks and periods of stress.
Short Term Reaction
Research shows that Bitcoin often reacts positively or at least holds better than equities during the first days of geopolitical shocks. A study by Simeng Liu et al. (2023) analyzing the Russia-Ukraine conflict found that Bitcoin displayed positive short term cumulative returns using econometric models. Similarly, Cardoso, Golitsis and Gkasis (2024) found that concrete geopolitical actions such as military operations had a statistically significant positive impact on Bitcoin returns, while longer term risks were less relevant.
Longer Term Patterns
Over longer periods, the safe haven effect weakens. Studies reviewed by WisdomTree Prime highlight that while Bitcoin may offer temporary protection, its long term correlation with the Geopolitical Risk Index remains weak. An analysis by Bitwise Investments also concluded that Bitcoin is not a consistent hedge, although it sometimes provides above average returns after specific events.
Trading Activity
A 2024 preprint by Ivan Sergio and Danilo Petti shows that geopolitical risk increases Bitcoin trading volume, particularly in developing markets. This indicates that uncertainty drives participation even if price gains are not always strong. Another study by Hoang, Nguyen and Tran (2025) found that geopolitical tensions can reduce volatility in some cryptocurrencies, suggesting markets may anticipate risk and stabilize around certain assets.
Comparison With Traditional Safe Havens
Gold, the Swiss franc and U.S. Treasury securities continue to show more reliable safe haven behavior. Data published by DIY Investor in July 2025 showed consistent gains for gold and the Swiss franc across one, six and twelve month horizons during major conflicts, while Bitcoin’s performance was uneven. Reuters reported in June 2025 that after Israeli airstrikes on Iran, gold, the Swiss franc and the Japanese yen appreciated, while cryptocurrencies fell.
Why the Narrative Persists
The safe haven narrative around Bitcoin continues for several reasons:
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Bitcoin is scarce and decentralized, which appeals to investors who distrust governments in times of conflict.
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Media attention amplifies cases where Bitcoin resists better than equities.
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Institutional adoption through ETFs and custody solutions improves access and credibility.
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At times, Bitcoin shows lower correlation with equities, creating moments when it behaves differently from risk assets.
Key Limitations
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Volatility in cryptocurrencies is far higher than in gold or major currencies, which reduces their effectiveness as hedges.
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The type of geopolitical event matters. Concrete acts such as military conflict show stronger effects than general threats.
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Liquidity constraints and regulatory actions during crises can reduce the resilience of crypto markets.
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Over long horizons, crypto does not consistently outperform traditional safe havens.
Implications for Investors
Investors should treat crypto as a complementary hedge rather than a replacement for gold or stable currencies. A diversified strategy that combines Bitcoin with gold and safe currencies offers stronger protection. Short term positioning may benefit from Bitcoin’s resilience immediately after shocks, while long term holding requires a higher tolerance for volatility. Monitoring indices such as the GPR and EPU, alongside trading volumes, can provide signals of how crypto may respond to geopolitical stress.
Conclusion
Geopolitical uncertainty will remain a defining factor for global markets. Bitcoin and other cryptocurrencies show some safe haven characteristics, especially in the short term and in specific types of crises. However, they lack the consistency and stability of traditional safe havens such as gold or the Swiss franc. For most investors, the optimal approach is to use crypto as part of a broader defensive strategy rather than relying on it alone.
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