Are Crypto Assets Connected to Real World Shocks? The Nexus Between Terrorist Attacks, Bitcoin and NFTs

Firuze Simay Sezgin and Caner Özdurak ()
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Firuze Simay Sezgin: Koc University, Institute of Social Sciences, Political Science and International Relations, Istanbul, Turkiye
Caner Özdurak: Yeditepe University, Department of Financial Economics, Istanbul, Turkiye

Journal of Economic Policy Researches, 2023, vol. 10, issue 1, 113-132

Abstract: This study investigates the impact of terrorist attacks on the price fluctuations of Bitcoin prices and NFT sales. Although the value proposition of cryptocurrencies, Decentralized Finance, and the whole blockchain revolution is a quicker, cheaper, and more transparent kind of finance, various terrorist organizations tend to use cryptocurrency anonymously to finance their terrorist activities around the world by bypassing the banking system of the regulated countries. The analyses reveal that returns of Bitcoin and NFT markets are positively associated with the organization and funding phases of the terrorist attacks but negatively associated with the post-terrorist attack circumstances, meaning that it generates positive abnormal returns (AR) prior to the attack but creates negative AR right after the attack. Furthermore, while the Bitcoin news impact curve (NIC) is nearly symmetric, the NFT NIC is asymmetric, with positive shocks having significantly more impact on future volatility than negative shocks of the same magnitude. Since previous studies claim that terrorist attack news is good news for Bitcoin returns, we will enrich our AR analysis results with NICs results.

Keywords: Cryptocurrencies; Terror attacks; Returns; Volatility; Event study; News impact curves JEL Classification : C22; G15; D81 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ist:iujepr:v:10:y:2023:i:1:p:113-132

DOI: 10.26650/JEPR1127482

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