Response of cryptocurrency to COVID-19

Bottom line:

The response of cryptocurrency markets to the COVID-19 has shown greater instability and irregularity than international stock markets. Thus, investment in digital markets presents a greater risk during the current global pandemic. 

Reference:

Lahmiri S. & Bekiros S. The impact of COVID-19 pandemic upon stability and sequential irregularity of equity and cryptocurrency markets. Chaos Solitons Fractals (2020). DOI: 10.1016/j.chaos.2020.109936

Date Published:

28 May 2020

Synopsis:

While the impacts of the COVID-19 pandemic on stock markets is constantly discussed, little analysis has been done on emerging cryptocurrency markets. This study utilizes a number of complex statistical analyses to compare the response of 45 cryptocurrencies and 16 international stock markets to COVID-19. Their analysis shows that in comparison to stock markets, cryptocurrency markets are less stable and more irregular. Furthermore, while stock markets have shown more irregularities, their analysis shows that they have remained relatively stable. Overall, while these findings are preliminary in nature they constitute a first attempt to inform investors, traders, and policy makers on the increasingly important cryptocurrency market. 

Summary by: Gil Yerushalmi