Cryptocurrencies as an Inflation Hedge: A Comparative Study Across High-Inflation Economies

Abstract

This study explores the effectiveness of cryptocurrencies as inflation hedges in high-inflation economies, with a comparative focus on their performance relative to traditional hedging instruments such as gold and real estate. Motivated by the global resurgence of inflation and growing distrust in fiat currencies, particularly in economically fragile nations, the research investigates how digital assets like Bitcoin function as stores of value under conditions of macroeconomic instability. Employing a literature-based review and cross-country case study methodology, the analysis covers the period from 2018 to 2025 and draws on empirical findings from Argentina, Venezuela, Turkey, Nigeria, and selected comparative cases including Zimbabwe and Lebanon.
The findings indicate that cryptocurrencies have demonstrated partial and context-dependent hedging effectiveness, especially in countries with weak monetary institutions, currency devaluation, and limited access to traditional financial systems. While gold remains the most reliable long-term hedge, and real estate offers inflation-linked appreciation in select environments, both assets are constrained by issues of liquidity, accessibility, and regulation. In contrast, cryptocurrencies offer high mobility and decentralized access but are hindered by extreme volatility and regulatory uncertainty.
The study concludes that cryptocurrencies should be treated as complementary, not substitute, hedging tools, requiring careful integration into diversified investment strategies. Policymakers are urged to develop transparent regulatory frameworks that support innovation while safeguarding consumers, and future research should expand empirical models and assess the role of stablecoins and central bank digital currencies (CBDCs) as emerging inflation buffers.