Assessing the Causal Nexus and Diversification Prospects of Metals and Cryptocurrencies in Light of Upheavals

The study delved into the nexus between cryptocurrencies and industrial metals, both ferrous and non-ferrous, employing a trifecta of analytical tools: quantile regression (QR), quantile-on-quantile (QQR), and quantile causality in mean (QCIM), with weekly data from January 2017 to December 2023. The QR outcomes unveiled a complex tapestry of asymmetric and conditional adverse impacts exerted by the majority of industrial metals on cryptos across diverse market landscapes, with BNB emerging as a conspicuous outlier. Notably, copper emerged as the preeminent metal in hedging and haven roles, with zinc, aluminium, and nickel exhibiting analogous traits. Conversely, BNB showcased a conspicuous lack of responsiveness to fluctuations in metal prices, indicating its ineptitude as a hedge or haven against most metallic counterparts, a sentiment echoed by lead and tin. Across various quantiles, the majority of sampled metals demonstrated adverse influences on cryptos, highlighting how tumultuous events such as market upheavals, global health crises, and geopolitical tensions spur crypto investors to seek refuge in industrial metals. The QR findings were further corroborated by QQR and QCIM analyses, with the latter asserting superiority. Notably, QCIM underscored that even the most tenuous connections observed in QR, particularly those involving lead and tin, retained significance in driving cryptodynamics, save for steel.