IDEAS home Printed from https://ideas.repec.org/a/taf/oaefxx/v12y2024i1p2408276.html
   My bibliography  Save this article

Navigating volatility spillover amidst investor extreme fear in stablecoin and financial markets

Author

Listed:
  • Alicia Ti
  • Zaäfri Ananto Husodo

Abstract

Investor sentiment has the potential to serve as a predictive factor for cryptocurrency assets, yet its impact on volatility spillover across markets remains uncertain. This research investigates the influence of investor sentiment classification on the volatility spillover from stablecoins to conventional financial markets. Empirical findings reveal the role of stablecoins as net volatility receivers from financial assets during extreme fear sentiment conditions, suggesting that stablecoins may function as a potential safe-haven when investors experience significant fear, offering insights to investors and portfolio managers regarding the potential use of stablecoins as a risk mitigation tool within an investment portfolio.Stablecoins play a pivotal role in stabilizing financial markets, particularly during periods of extreme fear and volatility. Using advanced modeling, the analysis uncovers how stablecoins act as critical safe-haven assets, absorbing shocks from both cryptocurrency and traditional markets. This ability to cushion volatility provides investors with a powerful tool for risk mitigation, especially in times of market turbulence. The findings not only highlight stablecoins' growing relevance in portfolio management but also offer key insights for policymakers looking to enhance the resilience of financial systems. By bridging the gap between digital and conventional assets, stablecoins are shown to be vital in maintaining liquidity and market stability, making them essential instruments for navigating both speculative and traditional investment landscapes.

Suggested Citation

  • Alicia Ti & Zaäfri Ananto Husodo, 2024. "Navigating volatility spillover amidst investor extreme fear in stablecoin and financial markets," Cogent Economics & Finance, Taylor & Francis Journals, vol. 12(1), pages 2408276-240, December.
  • Handle: RePEc:taf:oaefxx:v:12:y:2024:i:1:p:2408276
    DOI: 10.1080/23322039.2024.2408276
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/23322039.2024.2408276
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/23322039.2024.2408276?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:oaefxx:v:12:y:2024:i:1:p:2408276. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/OAEF20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.