Assessing the influence of cryptocurrencies on financial market stability

Arafet Farroukh (), Martina Metzger () and Hela Mzoughi ()
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Arafet Farroukh: University of Tunis El Manar and LIEI-FSEGT
Martina Metzger: Berlin School of Economics and Law, HWR Berlin
Hela Mzoughi: University of Tunis El Manar and L.R MASE-ESSAI(LR21ES21)

Eurasian Economic Review, 2025, vol. 15, issue 2, No 7, 425-472

Abstract: Abstract Given the increasing prominence of digital assets such as Bitcoin and Ethereum, it is crucial to understand their influence on the broader financial system. In this perspective, our investigation focuses on the impact of cryptocurrencies on financial market stability by analyzing the spillover effects using systemic risk measures, specifically Value-at-Risk and Conditional Value-at-Risk. Our methodology involves evaluating the transmission channels through which shocks in cryptocurrency markets may propagate systemic risk to traditional financial markets. The findings reveal significant insights into the degree of systemic risk posed by cryptocurrencies, offering valuable information for regulators, investors, and policymakers regarding the evolving relationship between digital assets and conventional financial systems. This research contributes to the ongoing discourse on integrating cryptocurrencies into global financial markets and informs risk management strategies in an increasingly digitized financial ecosystem.

Date: 2025
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DOI: 10.1007/s40822-024-00284-w

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