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The Effect of Positive and Negative Events on Cryptocurrency Prices

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  • Emrah Öget

Abstract

In recent years, cryptocurrencies have become a new topic for financial studies. In this study, the effects of positive and negative events related to cryptocurrencies on the prices of related cryptocurrencies were researched using the event study. These events include major listing, delisting and airdrop announcements, and SEC enforcements. As a result of the analysis, 22 significant abnormal return values related to negative events and eight significant abnormal return values related to positive events were determined at 1% significance level within the event window (-5, +10). Therefore, it has been determined that negative events have more effect on cryptocurrencies than positive events. The number of significant cumulative abnormal return values obtained (13 for negative events, three for positive events) also supports these results. The results of the study have crucial implications for investors, centralized cryptocurrency exchanges, and cryptocurrency CEOs. Even after the negative events were announced publicly, pull out of the market will prevent investors from making more losses. In addition, it is recommended that investors sell for profits in case of a rapid high return on the day of the listing announcement. Because it was determined that the prices returned to the equilibrium prices at the closing.

Suggested Citation

  • Emrah Öget, 2022. "The Effect of Positive and Negative Events on Cryptocurrency Prices," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 7(1), pages 16-31.
    • Handle: RePEc:ahs:journl:v:7:y:2022:i:1:p:16-31
    DOI: 10.30784/epfad.1011204
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    References listed on IDEAS

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    More about this item

    Keywords

    Event Study; Cryptocurrency; Abnormal Return; Altcoin;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • 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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