Central bank digital currency (CBDC) has emerged as a potential substitute for current payment methods, and, as such, news regarding CBDCs has the potential to influence cryptocurrency returns. In light of this, the present study undertakes an in-depth analysis of the impact of CBDC-related news on Bitcoin returns by implementing the dynamic conditional correlation generalized autoregressive conditional heteroskedasticity model. Our study reveals a noteworthy positive influence of CBDC-related news on Bitcoin returns. Specifically, positive news yields higher returns, while negative news results in lower returns. Our findings suggest that investor sentiments and future expectations regarding digital currencies are influenced by CBDC-related news. The present study underscores the significance of monitoring CBDC-related news for investors operating within the digital currency market.
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Akin et al. (2023) studied this question.
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