Bitcoin return: Impacts from the introduction of new altcoins

Thai Nguyen, Binh Nguyen Thanh, Thanh Cong Nguyen and Quang Quoc Nguyen

Research in International Business and Finance, 2019, vol. 48, issue C, 420-425

Abstract: The model predicting Bitcoin price formation remains a mystery to academia and investors. Newly invented cryptocurrencies (alternative coins – altcoins) with enhanced features may become close substitutes to Bitcoin in terms of risk diversification. Employing Autoregressive-Distributed-Lag (ARDL) estimations, we document the evidence that the introduction of a new altcoin tends to lower Bitcoin return by 0.7% which is substantial given that the average and median daily returns of Bitcoin are 0.63% and 0.27%, respectively. Our study suggests that the negative impact of an Initial Public Offering on existing stock prices can also be observed in the cryptocurrency market: altcoin introductions reduce Bitcoin return.

Keywords: Bitcoin; Altcoins; Price formation (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:48:y:2019:i:c:p:420-425

DOI: 10.1016/j.ribaf.2019.02.001

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