Are Cryptocurrencies Risky: Volatility of Cryptocurrencies

In addition, the demand for cryptocurrencies, which is seen as a high return opportunity, or rather as an investment tool, has increased in the digitalized world with the effect of the pandemic. Cryptocurrencies are widely seen as an investment tool. Although it is not clear whether there is a bubble at the moment, short-term returns in the bear market during the pandemic period attract attention to cryptocurrencies. In the literature, the necessity of paying attention to the risks of cryptocurrencies as well as short-term returns has been emphasized. In the study (Özaydın, 2021), the effects of the returns and volatility of Bitcoin, Ethereum, Binance and Ripple cryptocurrencies, which have the highest market value as of April 2021, before and after the pandemic were investigated with the help of a dummy variable. The results showed parallelism with the literature. The returns of cryptocurrencies have increased during the Covid19 period. Due to their increased volatility in the same period, they are investment instruments that should be carefully considered. In this study, besides the contribution made to the literature with current and different statistical models, the volume changes of Bitcoin and Ethereum were also examined. There was an increase in the volume changes of both currencies during the covid19 period. The reasons for the increase in volatility in cryptocurrencies can be explained as new inexperienced investors want to get high returns in a short time and trade with incomplete market information.

Asst. Prof. Orhan Özaydın

Resources
Özaydın, O. (2021), “Kripto Paraların Oynaklıkları ve Getirileri: Covid-19 Pandemi Etkisi”  Gelişim–UWE 5th International Conference On Economics And Finance, May 25-26, 2021, Online Conference