The Mediation effect for Bitcoin, Evidence from China Market on the Period of Covid-19 Outbreaking

Wen hsiang Chiu (), Shih-wei Hung () and Chiung-ju Liang ()
Additional contact information
Wen hsiang Chiu: National Taiwan University of Science and Technology
Shih-wei Hung: National Taipei University of Business
Chiung-ju Liang: National Taiwan University of Science and Technology

Economics Bulletin, 2020, vol. 40, issue 3, 1985-1993

Abstract: The outbreak of Wuhan pneumonia in China in January 2020, we observed that sharp falls in Chinese stock markets were often followed by a brief drop in the price of Bitcoin followed by a notable increase. The fact that the outbreak of infectious disease in China had little impact on US markets and at least a portion of the funds flowed back to the US through Bitcoin transactions suggests that the price of Bitcoin is related to an outflow of Chinese funds to the US. Our analysis combining the computational aspects of cumulative prospect theory with the stochastic dominance method indicates that investors facing instability on Chinese markets use Bitcoin for hedge trading, perhaps as an intermediary in times of emergency.

Keywords: Bitcoin; Covid-19; Cumulative Prospect Theory; Stochastic Dominance; Capital Outflows (search for similar items in EconPapers)
JEL-codes: C4 Z0 (search for similar items in EconPapers)
Date: 2020-08-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2020/Volume40/EB-20-V40-I3-P173.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-20-00605

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().