Is the Introduction of Futures Responsible for the Crash of Bitcoin
12 Pages Posted: 1 Mar 2019 Last revised: 21 Jan 2020
Date Written: June 14, 2019
The price of Bitcoin reached its peak a mere few days after the introduction of Bitcoin futures and suffered an 80% loss in the following year. In this paper, we find a significant and negative relationship between the introduction of Bitcoin futures and Bitcoin returns, and an insignificant or positive relationship for other 7 major non-Bitcoin cryptocurrencies. Within the first 45 days after the futures launch, Bitcoin suffered a -26.50% loss, while other cryptocurrencies could still provide positive returns. We presume that the launch of Bitcoin futures was to an extent responsible for the crash of Bitcoin.
Keywords: Bitcoin; Crypto-Currencies; Bitcoin Futures; Market Crash
JEL Classification: G14; G15
Suggested Citation: Suggested Citation