Study Finds Bitcoin Creates Positive Market Effects While Oil Causes Negative Impact
A new study by Rangga Handika from Tokyo International University examines how Bitcoin and oil affect major stock markets differently. Analyzing data from 2016-2024, the research found Bitcoin typically triggers positive contagion (markets move in the same direction), while oil creates negative contagion (markets move in opposite directions).
The study analyzed eight major equity markets including SP500 (US), FTSE 100 (UK), CAC40 (France), DAX30 (Germany), FTSE MIB (Italy), IBEX35 (Spain), Nikkei 225 (Japan), and SSE Composite (China). European markets showed consistent reactions to both Bitcoin and oil, while American and Asian markets displayed more varied responses.
Statistical analysis revealed dramatic correlation changes after January 2020. Bitcoin's correlation with the US market jumped from 0.0102 before the pandemic to 0.3786 after - a 3604% increase. Meanwhile, oil's correlation with US markets dropped from 0.3102 to 0.1342, representing a 57% decrease.
The research notes that both Bitcoin and oil have substantial market capitalizations - oil at approximately $2.1 trillion USD and Bitcoin at about $1.2 trillion USD (2023-2024 data). These values make them significant alternative investments with growing influence on traditional markets.
When oil prices increase, this tends to hurt many firms worldwide after the pandemic compared to before. However, decreasing oil prices benefit many firms post-pandemic. The positive Bitcoin contagion strengthens market linkages and reflects growing investor interest in Bitcoin as an alternative asset.
Key findings from the study include:
- European markets react more homogeneously to Bitcoin and oil shocks
- American and Asian markets show heterogeneous responses
- The pandemic significantly increased cross-market linkages
- Results remained consistent across different analytical approaches
- The correlation patterns hold even when adjusted for heteroskedasticity
The cryptocurrency space continues to mature globally with cross-border expansion accelerating. Australian crypto broker Swyftx is acquiring New Zealand's Easy Crypto exchange, with CEO Jason Titman citing "Trump's policy messaging around crypto as a tailwind" supporting the deal. Titman believes favorable US regulations will spur more industry dealmaking as regulatory risks decrease.
