Are Sustainable Cryptocurrencies Immune to Policy Uncertainties? Unveiling the Asymmetric Implications of Climate and Global Economic Policy Uncertainty for Green Cryptocurrencies

Abstract

Advanced blockchain technologies and growing environmental and economic uncertainties have  otivated
us to investigate the impact of climate policy uncertainty (CPU) and global economic policy uncertainty (GEPU) on five green cryptocurrencies—ADA, EOS, IOTA, XLM, XTZ—selected based on energy efficiency and mining processes. We examined the short- and long-run impacts of alternative assets on these cryptocurrencies using a  nonlinear autoregressive distributed lag model. In the long run, these cryptocurrencies are negatively affected by CPU and GEPU, questioning their safe-haven potential. In the short run, ADA, EOS, and XLM share a positive  asymmetric relationship with CPU, whereas all cryptocurrencies have a negative asymmetric relationship with GEPU. Therefore, they can be considered a safe haven. In the short and long term, green bonds exert a positive impact, whereas interest rates, the S&P 500, and the gold index negatively impact these cryptocurrencies. In the short run, Bitcoin shows a negative relationship with EOS, IOTA, and XTZ and a positive relationship with ADA and XLM. Over the long term, Bitcoin exhibits a positive correlation with all cryptocurrencies. USD exhibits a positive relationship in the short run and a negative relationship in the long run with all cryptocurrencies. The findings offer practical implications for portfolio construction and investors dealing in the green cryptocurrency market.

Keywords

Green Cryptocurrencies

climate policy uncertainty

global economic policy uncertainty

Bitcoin

non-linear autoregressive distributed lag

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