Cryptocurrencies as an Investment in the New Era: Evidence from the Western Balkans
Cryptocurrencies as an Investment in the New Era: Evidence from the Western Balkans

Author(s): Arjeta Hallunovi
Subject(s): Politics / Political Sciences, Politics, Economy, National Economy, Economic policy, Financial Markets, Socio-Economic Research
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: Bitcoin; Cryptocurrencies; Ethereum; GARCH Model; Emerging Markets; Western Balkans
Summary/Abstract: In recent years, cryptocurrencies have gained significant attention as an alternative investment class in emerging markets, including the Western Balkans. This study empirically investigates the role of cryptocurrencies – specifically Bitcoin and Ethereum – as investment tools across Albania, Serbia, North Macedonia, Kosovo, Bosnia and Herzegovina, and Montenegro from 2017 to 2024. Using daily market data, Google Trends indices, and national survey data, the study applies timeseries regression and volatility modeling (GARCH) to analyze investor behavior, returns, and risk exposure compared to traditional assets like equities and foreign exchange. The results reveal a growing interest in crypto-assets, driven largely by inflationary pressures, limited access to capital markets, and rising youth digital literacy. However, the empirical findings also point to high return volatility, low market depth, and fragmented regulatory frameworks across the region. Despite these challenges, cryptocurrencies have shown potential for short-term speculative gains and limited long-term portfolio diversification benefits. The paper concludes by emphasizing the need for regulatory harmonization, investor education, and the development of digital finance infrastructure to ensure responsible integration of crypto-assets in the region’s financial ecosystems.

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