Capital flight or speculative demand: asymmetric drivers of the crypto exchange rate premium in distressed zones

Purpose The purpose of this study is to examine the asymmetric determinants of the crypto exchange rate premiums in two distinct crisis contexts: Ukraine’s war economy and Argentina’s high-inflation regime. Design/methodology/approach This study employs the Nonlinear Autoregressive Distributed Lag model on monthly data from January 2020 to December 2024. Findings This study finds a significant divergence in the function of crypto assets across jurisdictions. In Ukraine, the crypto exchange rate premium functions as a war barometer, responding asymmetrically to geopolitical risk (GPR), trade uncertainty and macroeconomic sentiment. These findings support the capital flight hypothesis, with crypto serving as a crisis-driven channel for capital outflows. Conversely, Argentina’s premium is driven by inflation and trade uncertainty rather than political conflict, indicating that crypto primarily facilitates inflation hedging and financial arbitrage. Moreover, heightened global crypto price uncertainty dampens the premium in both countries, highlighting limits to crypto as a flight or speculative instrument. Practical implications By linking movements in the crypto premium to inflation, trade uncertainty, GPR, macroeconomic sentiment and global crypto volatility, this study sheds light on how digital assets interact with macroeconomic shocks, international financial frictions and regulatory regimes, thereby showing cross-country heterogeneity in the role of crypto during economic and political crises. Originality/value This study provides a comparative analysis of how country-specific macro-financial asymmetry drives the crypto exchange rate premium.