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The Mediation effect for Bitcoin, Evidence from China Market on the Period of Covid-19 Outbreaking

Author

Listed:
  • Wen hsiang Chiu

    (National Taiwan University of Science and Technology)

  • Shih-wei Hung

    (National Taipei University of Business)

  • Chiung-ju Liang

    (National Taiwan University of Science and Technology)

Abstract

The outbreak of Wuhan pneumonia in China in January 2020, we observed that sharp falls in Chinese stock markets were often followed by a brief drop in the price of Bitcoin followed by a notable increase. The fact that the outbreak of infectious disease in China had little impact on US markets and at least a portion of the funds flowed back to the US through Bitcoin transactions suggests that the price of Bitcoin is related to an outflow of Chinese funds to the US. Our analysis combining the computational aspects of cumulative prospect theory with the stochastic dominance method indicates that investors facing instability on Chinese markets use Bitcoin for hedge trading, perhaps as an intermediary in times of emergency.

Suggested Citation

  • Wen hsiang Chiu & Shih-wei Hung & Chiung-ju Liang, 2020. "The Mediation effect for Bitcoin, Evidence from China Market on the Period of Covid-19 Outbreaking," Economics Bulletin, AccessEcon, vol. 40(3), pages 1985-1993.
    • Handle: RePEc:ebl:ecbull:eb-20-00605
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    References listed on IDEAS

    as
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    Cited by:

    1. Hugo S. Gonçalves & Sérgio Moro, 2023. "On the economic impacts of COVID‐19: A text mining literature analysis," Review of Development Economics, Wiley Blackwell, vol. 27(1), pages 375-394, February.
    2. Kedžo Margareta Gardijan, 2022. "COVID-19 pandemic impact on investment prospective in selected CEE stock markets: A stochastic dominance approach," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 8(2), pages 28-42, December.

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    More about this item

    Keywords

    Bitcoin; Covid-19; Cumulative Prospect Theory; Stochastic Dominance; Capital Outflows;
    All these keywords.

    JEL classification:

    • Z0 - Other Special Topics - - General
    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics

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