Connections between stock market and bitcoin market
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2019-08-25
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en
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During the recent years digital currencies have gained an outstanding popularity promising to revolutionize the entire financial system. This uprise was led mainly by Bitcoin.
As per this rise in popularity and usage, Bitcoin have started to be seen as speculative asset gaining attention for its performance compared to other asset. Bitcoin is a risky investment, due to its unpredictable volatility subjected to relevant upwards and downwards in a matter of hours. On the logical ground, these unique features match the preference of a risk lover investor. Indeed, a risk lover investor is focused on gaining extra profit through highly risk investments with high volatile environment. As a result, the paper investigates if a decrease in VIX might lead to an increase in the Bitcoin Market Capitalization, meaning that investor might have allocated resources from stock market to Bitcoin. Similarly, in order to underpin this hypothesis, the study wants to inspect whether an increase in Bitcoin volatility corresponds to a rise in Bitcoin market capitalization. Firstly, The results partly confirm the research question. In fact, risk lover traders appear to tread Bitcoin and the stock market impartially, switching their investments where the profitability increases more, regardless the risk. Secondly, Stock market capitalization appeared to have a great magnitude on influencing the Bitcoin market capitalization.
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Faculteit der Managementwetenschappen