Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/321501 
Year of Publication: 
2024
Citation: 
[Journal:] Cogent Economics & Finance [ISSN:] 2332-2039 [Volume:] 12 [Issue:] 1 [Article No.:] 2359599 [Year:] 2024 [Pages:] 1-12
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
Predictability of the various financial instruments can lead to more trust and investment. The study examines the long-term and causal relationship between various Nifty indices and the Ethereum cryptocurrency. This study considers the data from April 2015 to December 2022 in two phases, pre-covid and post-covid. Johansen's cointegration test was used to determine if the vectors in the data set are cointegrated, using the Max-Eigen and Trace tests for evaluation. The Granger causality test was also used to explore the short-term causal relationship between Ethereum and the five Nifty indices. The study found that post-pandemic daily returns of stock market indices have developed a significant cointegration with the cryptocurrency over time. The Granger causality test results showed bi-directional relationships of Nifty 50, Nifty 200 and Nifty Next 50 with Ethereum and a unidirectional relationship between Nifty Auto and Ethereum. The non-linear results reveal a one-way relationship pre-covid and a bi-directional relationship post-covid except for Nifty Banks. Johansen's cointegration test, both in the pre-and post-covid-era, indicated that these indices had a substantial long-term cointegration with cryptocurrencies. This study also offers guidance to investors in making long-term investment decisions and to regulatory authorities. This implied that the investing decisions resulted in developing a causal relationship between the equity market and cryptocurrencies, which seemed very unlikely before 2020. This indicates that a new and young investor also considered cryptocurrencies a viable alternate investment option compared to traditional options such as fixed deposits, gold, and other fixed-income instruments. The study explores the relationship between Nifty indices and Ethereum cryptocurrency. Bi-directional relationships between Nifty 50, Nifty 200, and Nifty Next 50 with Ethereum are observed. Pre-COVID, a one-way relationship is noted, whereas the relationship was bi-directional post-COVID. These results indicate that consumer trust is increasing in cryptocurrencies and is being accepted as viable investments over traditional investment options. This signals a shift in investor preferences. This finding will also increase the predictability of the market and will impact investor decisions and regulatory frameworks.
Subjects: 
Nifty indices
Ethereum
X
trading options
cryptocurrency prices
Covid 19
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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