COVID-19, Cryptocurrency Bubble and Cryptocurrency Market Efficiency in The World

Abstract

This study examines the effects of the epidemic and the price bubble on the effectiveness of the cryptocurrency market. In this Research, We collect the daily closing price of 5 cryptocurrencies from https://coinmarketcap.com/. The data was taken from 01 September 2017 to 14 December 2021 with a total data or sample of 1231 daily data from each currency or a total of 6155 samples from a total of all tested currencies. The five cryptocurrencies are Litecoin (LTC), Cardano (ADA), Ethereum (ETH), Ripple (XRP), and Bitcoin (BTC). To measure market inefficiency we use magnitude market inefficiency (MIM) and the study by Le Tran and Leirvik (2019) is used to establish the adjusted magnitude of market inefficiency (AMIM). In this study AMIMt is calculated on a daily frequency by using the daily closing price as the basis for calculation.We found that the three periods of the cryptocurrency bubble in the cryptocurrency market occurred in late 2017, early 2018, and July 2020. The cryptocurrency financial bubble had a lesser impact than the announcement of a worldwide pandemic being declared for COVID-19 on March 11, 2020. It is very likely that a bubble will occur during July 2020 related to the declaration that COVID-19 is a pandemic of global scope.

Factors affecting the adoption of cryptocurrencies for financial transactions

“…Cryptocurrency is an innovative new age digital exchange based on cryptography to protect and administer transactions in the supply of digital currencies during circulation (Sousa et al ., 2022). The first cryptocurrency block in the history was the Bitcoin, which was created in 2008 by an anonymous person named “Satoshi Nakamoto” (Laura, 2020). The blockchain of Bitcoin includes enormous numbers of blocks of transactions saved in a distributed general ledger that tracks the identity of each anonymous owner and user.…”

Using cryptocurrencies and transactions in medical tourism

“…Although there are many types of the cryptocurrency concept, there are three important cryptocurrencies in terms of transaction volume and recognition: Bitcoin, altcoins and tokens/dApps. The most popular of these three types of digital currencies is Bitcoin (Laura, 2020; Andresen, 2014; Ben-Sasson et al , 2015). Bitcoin is a digital currency released by an unknown person named Satoshi Nakamoto in 2008 (Laura, 2020).…”

“…The most popular of these three types of digital currencies is Bitcoin (Laura, 2020; Andresen, 2014; Ben-Sasson et al , 2015). Bitcoin is a digital currency released by an unknown person named Satoshi Nakamoto in 2008 (Laura, 2020). It is a currency that is not physical but can be sent and received just like any other physical currency (USD, EUR, etc.).…”

“…Tokens are mostly used to buy a product or get a discount on any dApps. Apart from these three major types, there are many cryptocurrencies, but only the important ones are briefly explained here (Laura, 2020; Andresen, 2014; Ben-Sasson et al , 2015).…”