Frequency connectedness between FinTech, NFT and DeFi: Considering linkages to investor sentiment

Samet Gunay, John W. Goodell, Shahnawaz Muhammed and Destan Kirimhan

International Review of Financial Analysis, 2023, vol. 90, issue C

Abstract: We explore the domain of FinTech, DeFi, and NFT market relationships considering investor attention. Using frequency connectedness analysis, we employ two different investor sentiment measures corresponding to cryptocurrency markets and the FinTech industry. Averaged median dynamic connectedness results indicate the dominance of the FinTech industry over the DeFi and NFT markets, with this effect more significant over short-term market cycles rather than long-term. Results of net pairwise dynamic directional connectedness analysis show increasing DeFi and NFT market stresses following the pandemic period that we identify as not related to the aftermath of the outbreak but rather to FinTech market dynamics. We also identify in turn return spillovers from DeFi, NFT, and investor sentiment for the cryptocurrency market to investor sentiment for the FinTech industry. This was especially pronounced during 2022 and potentially attributable to cyber mischief in the DeFi market. Results highlight unregulated cyber markets having the potential to engender financial instability.

Keywords: DeFi; NFT; FinTech; Investor sentiment; Cryptocurrency; Hacks; Cybersecurity (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:90:y:2023:i:c:s1057521923004416

DOI: 10.1016/j.irfa.2023.102925

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