Oil or Bitcoin? Geopolitical risk decides which leads equity markets

When shocks hit stock markets, does the danger come from crude oil or from Bitcoin? A new study argues that the question has no unconditional answer. Whether “black gold” or “digital gold” leads equity risk depends on the investment horizon, the level of geopolitical tension, and whether a country exports or imports oil, according to research accepted for publication in Frontiers in Applied Mathematics and Statistics.

The study, authored by Ramzi Drissi of Umm al-Qura University together with Hassene Ben Mbarek and Hammadi Sliti of Tunisian universities, builds a triangular system in which Brent crude oil and Bitcoin are potential shock transmitters and equities are the final object of interest. The researchers analyze daily data from 2020 to 2024 covering the Europe Brent spot price, Bitcoin, and benchmark equity indices for selected G7, BRICS, and GCC economies, alongside a global geopolitical risk index.

Methodologically, the framework is deliberately multi-scale. It combines continuous wavelet coherence and phase analysis, wavelet-based local projections, and frequency-domain connectedness within a single setting. The paper also introduces a Substitution Index, a measure that tracks over time and across frequencies whether equity risk is predominantly oil-led or Bitcoin-led at any given moment.

The headline result concerns horizons. In the band-filtered decomposition, oil carries the larger share of medium- to long-horizon equity risk, at scales of roughly one and a half to six months. Bitcoin matters mainly at short horizons, and chiefly during crypto-specific episodes rather than broadly across the sample.

Geopolitics reshapes this balance. Periods of high geopolitical risk coincide with a stronger oil–equity link and a weaker Bitcoin channel, pushing the Substitution Index toward oil. The tilt is more pronounced for net oil exporters—Canada, Russia, Saudi Arabia, and the United Arab Emirates—than for importers such as the euro area, Japan, India, and China.

The authors are careful to flag a methodological caveat. Both the horizon pattern and the exporter–importer contrast depend on how the decomposition is computed. Under a single unfiltered VAR, the Substitution Index is nearly identical across bands and the exporter–importer difference is not statistically significant, so the paper reports those patterns as descriptive rather than confirmed results.

That honesty about robustness is one of the study’s more notable features. Rather than presenting a single definitive ranking of oil versus Bitcoin, the paper frames the answer as conditional: in the baseline analysis, whether oil or Bitcoin leads, and whether the two act as substitutes or as complements, depends on the investment horizon and on the level of geopolitical risk.

The same shock can travel through different channels at different timescales, and geopolitical episodes appear to strengthen the oil channel while muting the crypto one, at least in the band-filtered results the authors emphasize.

The research was received in September 2026 and accepted in October 2026, and the final formatted version is yet to be published. As with any descriptive time-series analysis of a single four-year window that includes unusual episodes for both energy and crypto markets, the findings should be read as evidence about that period rather than as universal laws of finance.

What the paper ultimately offers is a framework rather than a slogan: a way to ask, at each horizon and in each geopolitical regime, which of the two “golds” is transmitting risk to equities. On that question, the study concludes, the digital-versus-black-gold debate has no unconditional answer.

Subject of Research: Multi-scale analysis of how Brent crude oil and Bitcoin transmit risk to global equity markets under varying geopolitical conditions.

Article Title: Geopolitical risk and the multi-scale leadership of oil and Bitcoin over global equities: a triangular wavelet–connectedness approach

Article References: Drissi, R., Mbarek, H. B., & Sliti, H. (2026). Geopolitical risk and the multi-scale leadership of oil and Bitcoin over global equities: a triangular wavelet–connectedness approach. Frontiers in Applied Mathematics and Statistics, 12, Article 1986406. https://doi.org/10.3389/fams.2026.1986406

Image Credits: AI Generated

DOI: 10.3389/fams.2026.1986406

Keywords: Brent crude oil, Bitcoin, equity markets, geopolitical risk, wavelet coherence, connectedness, spillovers, Substitution Index, oil exporters, oil importers, financial econometrics, time-frequency analysis