Asymmetric interactions among cutting-edge technologies and pioneering conventional and Islamic cryptocurrencies: fresh evidence from intra-day-based good and bad volatilities

Mahdi Ghaemi Asl () and David Roubaud ()
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Mahdi Ghaemi Asl: Kharazmi University
David Roubaud: Montpellier Business School

Financial Innovation, 2024, vol. 10, issue 1, 1-49

Abstract: Abstract This study examines the nexus between the good and bad volatilities of three technological revolutions—financial technology (FinTech), the Internet of Things, and artificial intelligence and technology—as well as the two main conventional and Islamic cryptocurrency platforms, Bitcoin and Stellar, via three approaches: quantile cross-spectral coherence, quantile-VAR connectedness, and quantile-based non-linear causality-in-mean and variance analysis. The results are as follows: (1) under normal market conditions, in long-run horizons there is a significant positive cross-spectral relationship between FinTech's positive volatilities and Stellar’s negative volatilities; (2) Stellar’s negative and positive volatilities exhibit the highest net spillovers at the lower and upper tails, respectively; and (3) the quantile-based causality results indicate that Bitcoin’s good (bad) volatilities can lead to bad (good) volatilities in all three smart technologies operating between normal and bull market conditions. Moreover, the Bitcoin industry’s negative volatilities have a bilateral cause-and-effect relationship with FinTech’s positive volatilities. By analyzing the second moment, we found that Bitcoin's negative volatilities are the only cause variable that generates FinTech's good volatility in a unidirectional manner. As for Stellar, only bad volatilities have the potential to signal good volatilities for cutting-edge technologies in some middle quantiles, whereas good volatilities have no significant effect. Hence, the trade-off between Bitcoin and cutting-edge technologies, especially FinTech-related advancements, appear more broadly and randomly compared with the Stellar-innovative technologies nexus. The findings provide valuable insights for FinTech companies, blockchain developers, crypto-asset regulators, portfolio managers, and high-tech investors.

Keywords: Cryptocurrency; Blockchain; Financial technology; Volatilities; Non-parametric quantile causality (search for similar items in EconPapers)
JEL-codes: G17 O14 O32 Q55 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1186/s40854-024-00623-5

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