Cryptocurrencies Responses to the Covid-19 Waves

Abstract

Pandemics are not new and have occurred at different stages in human history (Ferguson et al. 2020). However, their impacts on financial markets are different and sometimes divergent. The market's sensitivity to these crises can provoke unexpected responses and sometimes disclose the precariousness of a market considered a riskless or safe haven. Covid-19 crises are still one of the most disturbing health crises of this decade. Starting in china, this pandemic spread rapidly to threaten the whole globe, which explains the global interest in studying its impact on economic and financial stability around the world, especially that, Goodell and Goutte (2020) highlights that this virus is inflicting unprecedented global destructive economic damage.The research focuses on cryptocurrency's market sensitivity to the pandemic framework. This market arouses the researcher's interest in their apparition. This interest arises with the emergence of Covid-19 since the end of 2019. Moreover, the analysis of the cryptocurrency market's sensitivity in a health crisis is a first since the emergence of this market whose could challenge its performance. Empirically, the research adopts an econometric approach based on the DCC-EGarch model to analyze the dynamic relationship between the Covid-19 and the cryptocurrency market volume of transaction evolution. It presents, to the best of our knowledge, an unprecedented empirical investigation of the pandemic second wave's impact on the dynamic relationship between Covid-19 cases and cryptocurrencies transaction volume. The remainder of the paper is as follows. We start with a literature review. We pass them to the data and the applied methodology. Finally, we describe the empirical results and conclude.