Impact of cryptocurrencies on financial markets

Abstract

Cryptocurrency is no longer an unfamiliar concept. With the development of the digital economy, cryptocurrencies have gradually replaced some functions of traditional currencies. This research aims to measure and evaluate the impact of cryptocurrencies on financial markets by considering their effects on exchange rates, gold prices, oil prices, and stock indices. Data for the analysis were collected on a weekly basis from 1 January 2014 to 28 February 2021. The multiple linear regression model was used to examine the relationships in the research model using the statistical analysis software SPSS 22. The research results indicate that cryptocurrencies have an impact on the financial market. Specifically, the research also identified the inverse effect of currency pairs on cryptocurrencies and the interaction between different cryptocurrencies. Consequently, financial market regulators, especially the agency responsible for monitoring the volatility of cryptocurrencies, exchange rates, gold prices, oil prices, and stock indices, have a basis for devising appropriate plans. From this research, managers can implement policies that enhance financial education and communication to help individuals understand the nature of virtual assets, especially cryptocurrencies, while creating motivation towards accepting cryptocurrencies in Vietnam.

Keywords: cryptocurrencies, exchange rates, financial markets

JEL Classification: F31, G41