THE CONTAGION EFFECTS OF COVID-19 PANDEMIC ON CRYPTOCURRENCIES

• Published in: Humanities & Social Sciences Reviews Vol. 9; no. 2; pp. 370 - 379
• Main Authors: Ullah, Mahboob, Shaikh, Maria, Jadoon, Imran Abbas, Khan, Muhammad Azizullah, Alizai, Shahida Habib
• Format: Journal Article
• Language: English
• Published: 19.04.2021
• ISSN: 2395-6518; 2395-6518
• DOI: 10.18510/hssr.2021.9236

Purpose of the Study: In this research, the association between the COVID-19 pandemic and cryptocurrencies' price volatility has been examined. Methodology: To check the contagion effects of the COVID-19 pandemic on the price volatility of cryptocurrencies: BITCOIN, LITECOIN, XRP(RIPPLE), and ETHEREUM, the prices of all four are deployed from 10th August 2016 to 10th August 2020. The exponential generalized autoregressive conditional heteroscedastic (EGARCH) model is used to check the leverage effect exists or not. Stata 16 has been used to execute all the tests. Main Findings: The study's findings indicated that the leverage effect on the price volatility is present for LITECOIN, XRP(RIPPLE), and ETHEREUM but not for BITCOIN. Applications of the study: This study is significant for investors to develop strategies for investments and secure the transactions and control the creation of additional currency units. Also, it gives insight to the policy and decision-makers to articulate proper guidelines to overcome or minimize the effect of COVID-19 on cryptocurrency. Novelty/Originality of this Study: The motive for taking the crypto market into account is that the crypto market is one of the emerging markets and has started to have significance worldwide, linking with financial markets and economic growth. The leverage effect of COVID-19 is considered in this study as the epidemic has affected the supply and demand of goods due to lockdowns, blockages, and disruptions in delivery chains that lead to undiminished economic growth.