Published Online:July 2024
Product Name:The IUP Journal of Accounting Research & Audit Practices
Product Type:Article
Product Code:
Author Name:Abhay Kumar , Shilpa Rastogi , Abhishek Kumar Sinha and Bhanu Sireesha
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:20
Virtual currency or cryptocurrency has gained ground in the digital era, prominently due to the universal acceptability of blockchain. This paper applied both machine learning (ML) techniques and finance models to analyze the pattern and volatility of cryptocurrencies. The behavior of various cryptocurrencies was comparatively analyzed on various metrics, and it was found that most of them showed a similar pattern under ML techniques. Further, the closing price of the five selected cryptocurrencies showed that Tether surpassed the other cryptocurrencies which also followed the same trend. Financial model GARCH was applied to understand and forecast the volatility of the selected cryptocurrencies. The study also estimated the spillover effect using R studio software to analyze the short- and long-term impacts of Bitcoin and Ethereum on varied cryptocurrencies. Both ML and finance models showed comparable outcomes.
With an accelerated growth in the blockchain industry, which is gradually becoming all pervasive in all industries across the globe, an alternative to physical money, i.e., digital currency or virtual currency, was introduced using encrypted algorithms as a means of payments. The blockchain transactional databases support cryptocurrency transaction and are stored and maintained in an electronic ledger. Blockchain records all anonymous transactions and keeps the historical record transparent and confidential (Georgoula et al., 2015). The financial services sector has benefitted the most from blockchain technology (Pigou, 1920). Digital currency as a medium of exchange, which can be used as a mode of online payment, is termed cryptocurrency. The global cryptocurrency market is projected to grow from $910.3 mn in 2021 to $1,902.5 mn in 2028 at a CAGR of 11.1% in 2021-2028 (Kamath and Habeeb, 2023). Cryptocurrency is a universal market with no third-party intervention like bank, etc. and has a decentralized control. Given that the foreign exchange currency problem between two or more countries (Bakas et al., 2022) could be solved using cryptocurrency, the prospects of the same looks bright.