Is Bitcoin a Substitute for Traditional Commodity Money? A Safe Haven for Africa’s Forex Markets during the COVID-19 Outbreak

Bitcoin has been reported by empirical studies as mostly isolated or uncorrelated with conventional financial assets, thereby expounding its safe haven potentials in both normal and crisis periods. However, instead of the assumptions, the COVID-19 outbreak presents a maiden real global market turbulence period to re-examine bitcoin’s safety net features. This paper, therefore, provides answers as to whether bitcoin overrides traditionally acclaimed store of value commodities like gold, silver, palladium, and platinum, to give shelter for foreign exchange rate market investments during the epidemic and pandemic periods of the COVID-19 crisis. Our results put gold and silver ahead of the other safe haven candidates in both crisis periods and signal that investors can still hold them in trust during these stressful market periods. Further results show that bitcoin contested fairly well during the epidemic phase, however, it lost out to place last as the crisis transitioned to a pandemic, indicative of a temporal safety net properties. This implies that bitcoin, for now, offers less relevance to mitigate investment losses of Africa’s currency market investors.