Examining the relationship between digital currency price fluctuations with stock index, stock liquidity and stock trading volume
Subject Areas : Investments
Mohammad Reza Rajaei
1
,
Maryam Emamimibody
2
*
1 - Department of Accounting, Shahi.C., Islamic Azad University, Shahinshahr, Iran.
2 - Department of Accounting, Shahi.C., Islamic Azad University, Shahinshahr, Iran.
Keywords: Stock Trading Volume, Stock Index, Stock Liquidity, Digital Currency Price Fluctuations,
Abstract :
Purpose: This study aims to investigate the relationship between cryptocurrency price volatility and the stock index, stock liquidity, and trading volume in the Tehran Stock Exchange (TSE).
Research Methodology: The statistical sample consists of 105 companies listed on the Tehran Stock Exchange during the period from 2014 to 2022 (1393–1401 SH). To analyze the data and test the hypotheses, multivariate regression models were employed using panel data methodology.
Findings: The results reveal a significant positive relationship between cryptocurrency price volatility and stock liquidity, trading volume, and stock price index of the companies listed on the TSE. Consequently, since cryptocurrency volatility leads to an increase in stock liquidity, trading volume, and the stock price index, it is essential for firms aiming to boost profitability or capital, as well as for individual investors seeking effective asset portfolio management, to account for these upward changes in market dynamics during periods of heightened crypto volatility.
Originality / Value: Most existing studies on cryptocurrencies in Iran have primarily focused on theoretical aspects or the translation of global literature. Little attention has been given to the empirical relationship between cryptocurrency volatility and key market indicators such as index performance, pricing, liquidity, and trading activity in the stock market. This research addresses this gap by providing empirical evidence on the influence of cryptocurrency dynamics on the Iranian capital market.
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