Risk of Investment in Cryptocurrencies

Sylwester Kozak () and Gajdek Seweryn ()
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Gajdek Seweryn: Faculty of Economics, Warsaw University of Life Sciences, Poland

Economic and Regional Studies / Studia Ekonomiczne i Regionalne, 2021, vol. 14, issue 3, 294-304

Abstract: Subject and purpose of work: Cryptocurrencies are a phenomenon that has been strengthening its place in the world of finance for over ten years and which is becoming a frequent investment tool. The aim of this study is to compare the level of risk measures of investments in the cryptocurrency market with investments in global capital markets in 2011-2020. Materials and methods: The study used the quotations of the analysed instruments. The level of risk was estimated using standard deviation and semi-standard deviation of daily logarithmic rates of return. Results: Investment in cryptocurrencies is more risky than in shares of the largest international companies. The level of risk decreases with the duration of the cryptocurrency presence on the market. Conclusions: Achieving extraordinary rates of return generates an increased demand and volatility of cryptocurrencies’ quotations. The level of risk of investing in cryptocurrencies is much higher than in the indexes of global capital exchanges.

Keywords: investment; financial markets; cryptocurrency; risk (search for similar items in EconPapers)
JEL-codes: E22 E44 E51 G14 (search for similar items in EconPapers)
Date: 2021
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Related works:
Journal Article: RISK OF INVESTMENT IN CRYPTOCURRENCIES (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ecoreg:v:14:y:2021:i:3:p:294-304:n:8

DOI: 10.2478/ers-2021-0021

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