Bad News, Technical Development and Cryptocurrencies Stability

14 Pages Posted: 20 Apr 2018 Last revised: 27 Dec 2018

See all articles by Jamil Civitarese

Jamil Civitarese

Getulio Vargas Foundation (FGV) - Brazilian School of Public and Business Administration (EBAPE)

Layla Mendes

Getulio Vargas Foundation (FGV)

Date Written: December 1, 2018

Abstract

Cryptocurrencies are recent, yet they attract great interest and investments. The current level of market efficiency of these assets, nevertheless, is a subject that must be studied. If the asset is dependent on technology, critical failures of the technical structure must lead to negative returns. In such case, bad news about technology -- the so called Fear, Uncertainty and Doubt (FUD) periods -- are believed to play an important role in price fluctuations. In this paper, we argue FUDs indeed represent an important source of market uncertainty and affect negatively cryptocurrencies prices. Five negative technological reviews of alternative cryptocurrencies are the object of event studies. These cases reveal alternative cryptocurrencies possibly have semi-strong of Market Efficiency as prices quickly adjust to new public analyses of technology.

Keywords: Cryptocurrencies, Asset Pricing, Market Efficiency

JEL Classification: G14, G23

Suggested Citation

Civitarese, Jamil and Mendes, Layla, Bad News, Technical Development and Cryptocurrencies Stability (December 1, 2018). Available at SSRN: https://ssrn.com/abstract=3154124 or http://dx.doi.org/10.2139/ssrn.3154124

Jamil Civitarese (Contact Author)

Getulio Vargas Foundation (FGV) - Brazilian School of Public and Business Administration (EBAPE) ( email )

Brazil

HOME PAGE: http://www.jkcivitarese.tumblr.com

Layla Mendes

Getulio Vargas Foundation (FGV) ( email )

R. Dr. Neto de Araujo 320 cj 1307
Rio de Janeiro, Rio de Janeiro 22250-900
Brazil

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