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A new “Wall Street Darling?” effects of regulation sentiment in cryptocurrency markets

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  • Bonaparte, Yosef
  • Bernile, Gennaro

Abstract

We analyze the prospect of cryptocurrency regulation affects cryptocurrency prices, volatility and trading using the Google Trend technique to construct the Crypto Regulation Sentiment Index (CRSX) reflecting investors’ attitude towards Crypto regulation. Our analysis encompasses over 75% of the crypto market's daily activity. We find CRSX has no statistically significant long-term impact on cryptocurrency prices, consistent with investors having overly positive attitudes towards crypto assets, making crypto a “Wall Street Darling”. Nonetheless, CRSX has a large impact on cryptocurrency price volatility and trading volume. The effects of CSRX on crypto markets largely depends on the coin's key blockchain characteristics.

Suggested Citation

  • Bonaparte, Yosef & Bernile, Gennaro, 2023. "A new “Wall Street Darling?” effects of regulation sentiment in cryptocurrency markets," Finance Research Letters, Elsevier, vol. 52(C).
    • Handle: RePEc:eee:finlet:v:52:y:2023:i:c:s1544612322005530
    DOI: 10.1016/j.frl.2022.103376
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    More about this item

    Keywords

    Consensus mechanism; Blockchain finance; Regulation sentiment; Proof of Work (POF); Proof-of-Stake (POS); Ethereum; Bitcoin;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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