How Regulation Sentiments Influence Cryptocurrency? Is Crypto a Wall Street Darling?

This paper analyses the prospect of cryptocurrency regulation, especially, on crypto prices, volatility and volume. We employ the Google Trend technique and introduce the Crypto Regulation Sentiment Index (CRSX) that reflects Crypto regulation fear at the US and Global levels. We utilize over 75% of the crypto financial market daily data, including Bitcoin and several Altcoins (Ethereum, Solana, etc.). Surprisingly we find that CRSX has small and not statistically significant long term impact on cryptocurrency prices, and thus we classify crypto as the “Wall street Darling,” as a reflection of the forgiveness that investors exhibit to crypto bad news. Yet, CRSX exhibit a large impact on cryptocurrency volatility and trading volume, especially in recent years, perhaps due to the fact that crypto becomes more as a main stream. Moreover; the CRSX impact on crypto varies by coin’s key blockchain characteristics, especially, the type of blockchain consensus mechanism (POF vs POS). Collectively, we demonstrate that the regulating sentiment impacts crypto volatility and volume and varies by the type of the employed consensus mechanism