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Does blockchain patent-development influence Bitcoin risk?

Yang Hu, Hou, Yang (Greg), Les Oxley () and Shaen Corbet ()

Journal of International Financial Markets, Institutions and Money, 2021, vol. 70, issue C

Abstract: The paper presents a novel analysis specifically investigating as to whether stocks associated with leading blockchain patent-developments influence the price volatility of Bitcoin across multiple time frequencies. It is important to further develop our understanding of the inter-dynamics between this relatively youthful financial product and pricing sensitivities associated with corporate technological advancement. Several interesting results are presented. First, Bitcoin is identified as a volatility receiver instead of a transmitter across all of the time frequencies considered during periods of patent development. Secondly, Microsoft, Mastercard, Intel and Visa contribute the largest volatility spillovers to the Bitcoin market due to patent development. Finally, for most of the companies considered, the calculated spillover effects towards Bitcoin markets are found to increase from the short-term to the long-term. These results suggest the existence of an avenue through which large corporations can influence cryptocurrency prices through their announcements of future technological intentions. The inherent risks incorporated with blockchain and cryptocurrency patent-development should be studied in detail, with particular warnings presented to those companies with no evidence of prior exposure and market knowledge.

Keywords: Bitcoin; Cryptocurrency; Blockchain; Volatility; Spillovers; Contagion; Patents; Intellectual property (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.intfin.2020.101263

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Journal of International Financial Markets, Institutions and Money is currently edited by I. Mathur and C. J. Neely

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