Stablecoins as"Transitional Intermediary"or"Investment Substitute"for Traditional Cryptocurrencies:From the Perspective of Geopolitical Risk Shocks
From the perspective of geopolitical risk shocks,this paper constructs a PSTR model based on the unbalanced panel data of 18 traditional cryptocurrencies with leading market values from January 1,2017 to December 18,2022 to explore whether stablecoins act as"transitional intermediary"or"investment substitute"for traditional cryptocurrencies.The research reveals that with the improvement of the development level of stablecoins,their function as"investment substitute"for traditional cryptocurrencies becomes evident and the stimulating effect of geopolitical risks on price volatility of traditional cryptocurrencies will be inhibited.Heterogeneity tests demonstrate that stablecoins can act as"investment substitute"for traditional cryptocurrencies regardless of their issuance time or adherence to BEP-20 standard.Mechanism test and moderating effect analysis indicate that geopolitical risks can affect price volatility of traditional cryptocurrencies by influencing their rate of return regardless of the low or high development level of stablecoins;at different development levels of stablecoins,the moderating effect of US dollar liquidity on the relationship between geopolitical risks and price volatility of traditional cryptocurrencies is significant.
geopolitical riskcryptocurrencystablecoinprice volatilityUS dollar liquidity
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