The crypto Wild West: a deep dive into the market volatility of junk coins versus Bitcoin

António Portugal Duarte, Fátima Sol Murta and Simão Oliviera

Journal of Financial Market Infrastructures

Abstract: This study analyzes the volatility of Bitcoin returns in comparison with that of three cryptocurrencies commonly referred to as “junk coins†or “shitcoins†: Dogecoin, Shiba Inu and Baby Doge Coin. To achieve this, we employ generalized autoregressive conditional heteroscedasticity models, a methodology frequently used to identify volatility patterns in financial time series. Our empirical findings reveal that Bitcoin’s returns exhibit significantly lower volatility than the three alternative cryptocurrencies. This outcome reinforces Bitcoin’s role as the benchmark cryptoasset within the cryptocurrency market. In contrast, Baby Doge Coin displays pronounced volatility, highlighting its heightened susceptibility to speculative trading. The other junk coins, Dogecoin and Shiba Inu, while more stable than Baby Doge Coin, still show a considerably higher degree of volatility than Bitcoin. The prevalence of such destabilizing behavior amplifies long-term investment risks and undermines market credibility, potentially hindering the broader acceptance of these junk coins as viable alternatives to fiat currencies.

References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.risk.net/node/7962361 (text/html)

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:rsk:journ7:7962361

Access Statistics for this article

More articles in Journal of Financial Market Infrastructures from Journal of Financial Market Infrastructures
Bibliographic data for series maintained by Thomas Paine ().