Why Crypto Markets Converge During Global Crises

There is a tendency among investors in cryptocurrencies to think that owning a sufficiently varied portfolio of different cryptos, tech stocks, and DeFi assets is sufficient diversification.

But at the end of the day, all these assets are at risk of being lumped together as “crypto” or “tech” as a sector and moving in sync with each other. This is especially true during external shocks like geopolitical events.

A recent study by researchers at the Higher Institute of Management of Tunis, Tunisia investigates this question. They looked at how metaverse tokens normally help reduce portfolio variance under ordinary conditions, but not so much during conflict like the war in Ukraine.

They published their findings in Finance Research Open¹, under the title “Geopolitical shocks and interconnectedness of meta coins, cryptocurrencies, Defi and MSCI with portfolio implications”.

Building Digital Token Portfolio Beyond Cryptos

Investors in digital assets can today construct portfolios by combining conventional cryptocurrencies with DeFi and Metaverse tokens, in a bid to diversify their exposure to any given segment of the digital assets industry or any specific token in particular.

As cryptocurrencies themselves are closely interconnected, such a wider approach can help diversify risk.

As crypto is already largely independent of conventional instruments such as oil, equities, bonds, gold, and fiat currencies, this could in theory bring the necessary level of diversification to a portfolio without leaving the digital asset space.

However, major cryptocurrencies failed to act as reliable hedges or safe havens against equity markets during the COVID-19 pandemic, as the interconnection between cryptocurrencies and traditional financial markets intensified precisely during periods of distress.

Similarly, the correlation between “mainstream” financial assets and cryptocurrencies rose around the invasion of Ukraine, from around 60% to 90%. During these events, gold acted as a strong safe haven at extreme quantiles while Bitcoin (BTC ) offered, at best, a weak hedge.

So is the same true for other digital assets? And if yes, can it be quantified to assess the real level of diversification they provide in periods of crisis?

Studying Digital Assets and Crises

The researchers gathered daily data of the selected three metaverse tokens (Tezos (XTZ ) -XTZ, Axie Infinity (AXS ) -AXS, Decentraland (MANA ) -MANA), three DeFi assets (Chainlink (LINK ) -LINK, Maker-MKR, Basic Attention Token (BAT ) -BAT), one technological index MSCI and three cryptocurrencies (Bitcoin, Cardano (ADA ), Tether). The data covered the time period from November 09, 2020, to October 06, 2023.

They primarily analyzed three financial metrics:

• The interconnectedness between metaverse tokens, two key groups of digital assets-cryptocurrencies and DeFi tokens and the MSCI index.
• Using the DCC-GARCH model as a robustness check, verifying that the conclusions drawn from these data are actually reliable.
• The hedging and diversification capacities of metaverse tokens

Correlation Between Assets Classes

Metaverse Tokens

The researchers found that during this period marked by geopolitical events, the correlation between the mainstream stock index and DeFi & metaverse tokens was rather strong.

“The total Return and volatility spillover between metaverse tokens, Defi tokens and MSCI are respectively (67.31%) and (43.49%) of the total forecast error variance within the network. This finding underscores the strengthened interplay between the two markets during the full period analyzed.”

They then investigated the directional impact each asset exerts within the network, hence following the process of shock transmission. They found that MSCI affected only weakly metaverse tokens, and the reverse was also true.

“The return transmissions are highest from BAT (79.03%), LINK (79.46%), and MKR (61.16%) to the system, whereas they are lowest from the MSCI (25.24%) to the system”

However, DeFi tokens are important determinants in forecasting the volatility of metaverse tokens.

Source: Finance Research Open

This somewhat changed during the war in Ukraine, with a shift in some assets from being net transmitters of return or volatility to becoming receivers like MANA, AXS, XTZ, and MKR.

Simultaneously, the overall volatility connectedness spans from -39% to 65%, with a distinctive peak coinciding with the onset of the Russian conflict crisis.

Source: Finance Research Open

Cryptos

The return transmissions are highest from BTC (62.59%) and ADA (63.33%) to the system, whereas they are lowest from USDT (5%) to the system

So USDT weakly affects the metaverse tokens, suggesting that USDT is not an effective predictor of metaverse tokens but Bitcoin is. The reverse is not true, as the influence of metaverse tokens is weak on the ADA and Bitcoin. What is true for price actions is also true for volatility:

“The volatility of the USDT negligibly affects the volatility of metaverse tokens however the volatility of BTC and ADA highly affects the volatility of metaverse tokens.”

Here too, this link was affected by geopolitical crises:

“Notably, during the Russo-Ukrainian War, there is a discernible shift in certain assets like MANA, AXS, and XTZ, transforming from net transmitters of return or volatility to becoming receivers.”

Source: Finance Research Open

Building A Digital Asset Portfolio

From a portfolio standpoint, a cryptocurrency that consistently acts as a net transmitter of shocks across the entire sample period has fewer potential risk sources, making it more interesting to investors.

DeFi tokens (BAT, LINK, and MKR) consistently emerge as net volatility transmitters across both model specifications and sub-periods, reflecting their central role within the decentralized finance ecosystem.

DeFi’s transmitting role intensifies during periods of market stress, consistent with financial contagion theory and previous evidence identifying DeFi as a major transmission channel within digital asset markets.

The effect is that metaverse tokens and DeFi are not as immune from external shocks as investors would think from their reactions in normal periods.

“During the conflict period, several bilateral relationships involving metaverse tokens reverse direction, reflecting their transition from volatility transmitters to receivers. ”

Checking for robustness, the research found that results remain consistent across all datasets and conditions.

A key lesson for investors is that geopolitical shocks not only strengthen market interconnectedness but also reshape shock-transmission patterns as investors shift toward more liquid assets. So during a crisis, what worked previously for diversification across digital assets might suddenly stop working.

Beyond Tokens: Infrastructure Exposure vs. Asset Correlation

Coinbase Global (COIN)

The study’s findings present a clear dilemma: if spreading capital across cryptocurrencies, DeFi, and metaverse tokens fails to protect a portfolio during market panics, how should investors approach exposure to this sector?

Direct token allocation leaves investors vulnerable to the synchronized drawdowns highlighted by the research. However, for those seeking broad, long-term exposure to the maturation of the digital asset ecosystem—without betting solely on a speculative basket of individual tokens—the focus shifts from the assets themselves to the underlying infrastructure.

This is where Coinbase Global (COIN ) has increasingly established itself as a central leader in the crypto and blockchain industry, providing equity exposure to the very rails supporting the asset categories examined in the study—from core cryptos to DeFi protocols and metaverse assets like MANA and AXS.

By 2025, Coinbase reported 8 million active accounts and stood as the world’s largest custodian of Bitcoin, holding 2.4 million BTC—representing roughly 12% of the entire circulating supply. This institutional scale makes it a key partner for major Bitcoin ETFs, providing secure custody and liquidity that bridges traditional finance and digital assets.

Beyond its core exchange platform, Coinbase captures value across multiple facets of the digital economy through a diverse ecosystem of complementary offerings:

• Coinbase One: A premium subscription service offering zero trading fees, boosted staking rewards, and institutional partner benefits.
• Coinbase Advanced: Designed specifically for high-volume and professional crypto traders.
• Coinbase Wallet: Enabling non-custodial storage of cryptocurrencies and NFTs independent of centralized exchanges.
• Coinbase Earn: A staking platform allowing users to generate yield on network assets, generating over $230M for customers in 2023 alone.
• Coinbase Card: A mainstream Visa debit card facilitating real-world crypto transactions with cash-back rewards in BTC and USDC.
• USD Coin (USDC): Co-developed as a major USD-backed stablecoin driving liquidity and institutional dollar-settlement across DeFi and exchange rails.

Looking forward, Coinbase has been actively working on tokenizing securities, exploring ways to bridge traditional Nasdaq-listed equities with blockchain-based settlement systems.

Navigating this landscape has not been without friction. The company continues to manage complex regulatory environments, SEC litigation, cybersecurity threats, and operational scaling pains alongside broader market shifts. Furthermore, long-term industry risks ranging from macro volatility to emerging technological shifts like quantum computing remain relevant considerations.

Nevertheless, a more mature and dominant Coinbase offers a structural entry point into the market. Rather than guessing which individual token will survive a geopolitical shock, holding equity in category-defining infrastructure allows investors to capitalize on the overarching adoption, custody, and trading volume of the digital asset economy.

You can also read more about Coinbase in our investment report dedicated to the company.

Latest Coinbase (COIN) Stock News and Developments

Study Referenced

^{1. Nadia Basty and Mouna Abidly. Geopolitical shocks and interconnectedness of meta coins, cryptocurrencies, DeFi and MSCI with portfolio implications. Finance Research Open. Volume 2, Issue 3, September 2026, 100151. https://doi.org/10.1016/j.finr.2026.100151}