Gold, Bitcoin, and Portfolio Diversification : Lessons from the Ukrainian War

Evidence from the 2022 Ukraine war suggests that, for diversification purposes, gold and bitcoin are complements rather than substitutes during crises. Precisely, this paper shows that (i) gold is a diversifier for European stocks and oil and a hedge for US stocks and T-bills, while Bitcoin is a diversifier for all the assets except T-bills, and (ii) since the outbreak of the war, gold is a safe haven for both stock markets and T-bills, but its correlation with oil increases, while Bitcoin has the opposite pattern. Meanwhile, the gold/bitcoin correlation drops during the war