Examining the Convergence of Virtual and Traditional Assets in Crypto Collisions

Online transactions and investments are made using cryptocurrency. The rapid surge in the value of cryptocurrency markets has led some to theorize that they might qualify as a new class of investment assets. Every cryptocurrency tries to address one or more real-world problems while adhering to the three characteristics and five attributes of money. The volatilities of five cryptocurrencies, the S&P500, the Nasdaq, the VIX, gold, and oil are all compared in this chapter. The study used the GARCH model to determine the link between cryptocurrency and other financial assets. In this chapter, three popular traditional assets-stock, oil, and gold-are compared to cryptocurrencies. Consequently, we will also include a brief synopsis of the items’ background data. The BEKK-GARCH model’s findings demonstrate that financial assets have a lower volatility spillover, while cryptocurrencies have a higher volatility spillover. The DCC-GARCH model’s findings demonstrated that the introduction of Bitcoin commodities had a noteworthy effect. For commercial and corporate economics, the growing market value of cryptocurrencies and their global demand provide a number of challenges and problems. The findings showed a constant association between cryptocurrencies and high positive values and that there were minimal dynamic conditional correlations between cryptocurrencies and financial assets during the stability era. Moreover, US investors viewed gold and Bitcoin as obstacles prior to the corona pandemic.