What is it about?

Cryptocurrencies like Bitcoin are increasingly connected to traditional stock markets worldwide — but does this hold true even in smaller, "frontier" markets with limited access to global finance? This study examines Iraq's Stock Exchange between 2020 and 2026 to find out. We found that in the short term, a rise in Bitcoin's price is linked to a small dip in Iraqi stock returns, suggesting investors treat Bitcoin as a competing place to put their money rather than a safe backup asset. Over the longer term, however, this link disappears entirely. We also tested decentralized finance (DeFi) tokens and found no meaningful connection to the Iraqi market at all — likely because DeFi remains too new, and access to it is still limited for most investors in frontier economies like Iraq.

Featured Image

Why is it important?

Frontier markets like Iraq are often assumed to be too isolated to be affected by global crypto trends. Our findings challenge that assumption: even a relatively closed stock market like Iraq's picks up short-term signals from Bitcoin's price swings, suggesting these markets are more exposed to global digital-asset risk than policymakers may realize. This matters for investors seeking portfolio diversification into frontier markets, and for regulators weighing how to respond to the growing global reach of cryptocurrencies.

Perspectives

I became interested in this question because frontier markets like Iraq's are rarely included in global studies of crypto-market spillovers, despite facing many of the same pressures. I wanted to know whether local investors here are as exposed to Bitcoin's volatility as those in developed markets — and it turns out, at least in the short run, they are.

Nawar Kanaan AL-Dabbagh
University of Mosul

Read the Original

This page is a summary of: Bitcoin, decentralized finance, and frontier markets: A controlled analysis of portfolio diversification (2020–2026), Risk Governance and Control Financial Markets & Institutions, September 2026, Virtus Interpress,
DOI: 10.22495/rgcv16i3p11.
You can read the full text:

Read

Contributors

The following have contributed to this page