Uncovering the Impact of Ftx, Blockfi, and the Genesis Collapse On Crypto Markets
Using an event study approach, we investigate the impact of FTX, BlockFi, and the Genesis collapses on the top ten cryptos in terms of market capitalization. Regarding the impact of the FTX collapse, the analysis of aggregate cryptocurrencies indicates negative abnormal returns leading to the event day, especially the last three days (with the highest being witnessed on t-1 which is more than 13%). Moreover, the cumulative abnormal returns of individual cryptocurrencies reveal most of them observed negative abnormal returns, especially on post-event days (t+1, t+3, t+5, t+7, and t+9). We link our findings to investors’ trust erosion in response to such events and thus creating panic among the investors. Precisely, we argue that such shocks are bound to create trust deficits owing to a lack of regulation related to investor protection. Motivated by the findings, we also tested the implication of BlockFi and the Genesis collapse. Overall, our results indicate that these events did not have any significant impact on the crypto market. We attribute this finding to the expectation adjustment of crypto investors
Year of publication: |
2023
|
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Authors: | azmi, wajahat ; Rizvi, Syed Aun R. ; Nobanee, Haitham ; Kowsalya, V. |
Publisher: |
[S.l.] : SSRN |
Saved in:
freely available
Saved in favorites
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