Decrypting Cryptocurrencies: An Exploration of the Impact on Financial Stability

Saleem, Mohamed Nihal, Doumenis, Yianni, Katsikas, Epameinondas, Izadi, Javad ORCID: and Koufopoulos, Dimitrios (2024) Decrypting Cryptocurrencies: An Exploration of the Impact on Financial Stability. Journal of Risk and Financial Management, 17 (5). ISSN 1911-8066

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This study aims to empirically examine the relationship between cryptocurrency and various facets of the financial system. It seeks to provide a comprehensive understanding of how cryptocurrencies interact with, and influence, the stock market, the U.S. dollar’s strength, inflation rates, and traditional banking operations. This is carried out using linear regression models, Granger causality tests, case studies, including the collapse of the Futures Exchange (FTX), and the successful integration of Binance. The study unveiled a strong positive correlation between cryptocurrency market capitalization and key financial indicators like the Dow Jones Industrial Average, Consumer Price Index, and traditional banking operations. This indicates the growing significance of cryptocurrencies within the global financial landscape. However, a mild association was found with the U.S. dollar, suggesting a limited influence of cryptocurrencies on traditional fiat currencies currently. Despite certain limitations such as reliance on secondary data, methodological choices, and geographic focus, this research provides valuable insights for policymakers, financial industry stakeholders, and academic researchers, underlining the necessity for continued study into the complex interplay between cryptocurrencies and financial stability.

Item Type: Article
Identifier: 10.3390/jrfm17050186
Keywords: cryptocurrencies; market capitalization; futures exchange; financial stability
Subjects: Business and finance
Depositing User: Javad Izadi
Date Deposited: 10 Jun 2024 10:35
Last Modified: 10 Jun 2024 10:45

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