The influence of stablecoin issuances on cryptocurrency markets

Lennart Ante, Ingo Fiedler and Elias Strehle

Finance Research Letters, 2021, vol. 41, issue C

Abstract: Stablecoins are digital currencies that are pegged to non-volatile assets. As alternatives to fiat currencies, they constitute an important aspect of cryptocurrency markets. We analyze returns of cryptocurrencies around 565 stablecoin issuances events for seven different stablecoins between April 2019 and March 2020. Our event study reveals market downturns in the week before issuance and positive abnormal returns in the twenty-four hours around the issuance. Effects differ and remain insignificant for some stablecoin subsamples and issuance size does not significantly affect the abnormal returns. We conclude that stablecoin issuances contribute to price discovery and market efficiency of cryptocurrencies.

Keywords: market efficiency; price discovery; asset pricing; tether; bitcoin; ethereum (search for similar items in EconPapers)
JEL-codes: G10 G14 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (26)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:41:y:2021:i:c:s1544612320316810

DOI: 10.1016/j.frl.2020.101867

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