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Gone with the fire: Market reaction to cryptocurrency exchange shutdown

Author

Listed:
  • Lee, Hanol
  • Wie, Dainn

Abstract

Disruption of exchanges frequently happens in the cryptocurrency market, though their potential impacts are relatively under-investigated. This study employs a 20-hour service interruption on October 15th, 2022, at Upbit, the dominant cryptocurrency exchange in Korea, as an exogenous shock of service interruption on the cryptocurrency market. Event study estimation shows that the change in abnormal returns depends on how important the specific exchange is to those cryptocurrencies. Cryptocurrencies predominantly traded on Upbit showed sharp reactions to both service disruption and recovery, while major currencies such as Bitcoin and Ethereum presented limited reactions to service interruption only.

Suggested Citation

  • Lee, Hanol & Wie, Dainn, 2022. "Gone with the fire: Market reaction to cryptocurrency exchange shutdown," EconStor Preprints 266545, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:266545
    as

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    File URL: https://www.econstor.eu/bitstream/10419/266545/1/Lee%26Wie2022.pdf
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    References listed on IDEAS

    as
    1. Chen, Conghui & Liu, Lanlan, 2022. "How effective is China's cryptocurrency trading ban?," Finance Research Letters, Elsevier, vol. 46(PB).
    2. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Cryptocurrency; abnormal return; Event study; Network service disruption;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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