Abstract:

This study examines whether Bitcoin and environmental, social and governance (ESG) equity investments act as inflation hedges across selected global financial markets. Monthly data from February 2017 to August 2026 are used for Bitcoin, three regional ESG exchange-traded funds and their conventional equity benchmarks. Inflation-hedging ability is evaluated through real returns, ordinary least-squares regressions with Newey-West standard errors, comparisons between normal- and high-inflation regimes, regional analysis and a combined Bitcoin-ESG portfolio. The results provide little evidence of reliable inflation protection. Bitcoin generated a high full-sample return but experienced extreme volatility and an annualized real return of -30.53% during high-inflation months. The ESG and conventional portfolios also produced negative real returns during high inflation, and ESG funds did not consistently outperform their conventional counterparts. A portfolio containing 20% Bitcoin and 80% ESG assets improved full-sample return relative to volatility, but it remained ineffective during high inflation and experienced greater downside risk than the ESG-only portfolio. The findings suggest that Bitcoin and ESG equities may contribute to long-term return seeking and diversification, but neither should be treated as an automatic or dependable inflation hedge.