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Coronavirus Spreads and Bitcoin's 2020 Rally: Is There a Link ?

Author

Listed:
  • Jamal Bouoiyour

    (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour, IRMAPE - Institut de Recherche en Management et Pays Emergents - ESC PAU - Ecole Supérieure de Commerce, Pau Business School)

  • Refk Selmi

    (IRMAPE - Institut de Recherche en Management et Pays Emergents - ESC PAU - Ecole Supérieure de Commerce, Pau Business School)

Abstract

The coronavirus epidemic is not the first virus outbreak that has threatened to disturb financial markets. But the world is now more interconnected since the 2003 SARS outbreak as global companies' revenues have become much more exposed to China. The purposes of this paper are threefold. The first is to address the timely question of whether Bitcoin exhibits a safe-haven property against heightened uncertainty over how the duration and spread of the coronavirus could hit the world economy. The second purpose is to assess if the initial news of the coronavirus outbreak have led to an increased volatility of Bitcoin. The third aim is to test if Bitcoin immediately react on publicly announced information (follows the hypothesis of efficient markets). We show that the current bullish sentiment is triggered by investors seeking Bitcoin as a safe haven in the uncertain times ahead. But we also find that the virus intensifies the volatility of Bitcoin due to a search by investors for alternative asset classes amid concerns about the coronavirus. The information regarding the coronavirus takes time to be reflected in the Bitcoin price, highlighting the associated inefficiencies it brings. Also, the risk to global markets may currently be masked owing to wide liquidity injections by Central Banks including the People's Bank of China and the U.S Federal Reserve.

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  • Jamal Bouoiyour & Refk Selmi, 2020. "Coronavirus Spreads and Bitcoin's 2020 Rally: Is There a Link ?," Working Papers hal-02493309, HAL.
    • Handle: RePEc:hal:wpaper:hal-02493309
    Note: View the original document on HAL open archive server: https://hal.science/hal-02493309v1
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    References listed on IDEAS

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    Cited by:

    1. Jonas Kibala Kuma, 2020. "World economy vis-a-vis the pandemia of Covid-19 : inventory of fixtures, analyses and prospects [L'économie mondiale face à la pandémie de la Covid-19 : état des lieux, analyses et perspectives]," Working Papers hal-02888395, HAL.
    2. Naeem, Muhammad Abubakr & Bouri, Elie & Peng, Zhe & Shahzad, Syed Jawad Hussain & Vo, Xuan Vinh, 2021. "Asymmetric efficiency of cryptocurrencies during COVID19," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 565(C).
    3. Cheng, Jiyang & Tiwari, Sunil & Khaled, Djebbouri & Mahendru, Mandeep & Shahzad, Umer, 2024. "Forecasting Bitcoin prices using artificial intelligence: Combination of ML, SARIMA, and Facebook Prophet models," Technological Forecasting and Social Change, Elsevier, vol. 198(C).
    4. Sarkodie, Samuel Asumadu & Ahmed, Maruf Yakubu & Owusu, Phebe Asantewaa, 2022. "COVID-19 pandemic improves market signals of cryptocurrencies–evidence from Bitcoin, Bitcoin Cash, Ethereum, and Litecoin," Finance Research Letters, Elsevier, vol. 44(C).
    5. Refk Selmi & Jamal Bouoiyour, 2020. "Global Market's Diagnosis on Coronavirus : A Tug of War between Hope and Fear," Working Papers hal-02514428, HAL.
    6. Pradeep, Moturi & Dyapa, Uday Kumar Reddy & Jalan, Sarika & Pradhan, Priodyuti, 2024. "Impact of Black Swan Events on Ethereum blockchain ERC20 token transaction networks," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 654(C).

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    More about this item

    Keywords

    Efficiency; Coronavirus; Bitcoin; Safe haven; Volatility;
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