Impact of Cryptocurrency Market Fluctuations on Traditional Stock Market Volatility in Japan
DOI:
https://doi.org/10.47941/ijf.3115Keywords:
Cryptocurrency Market Fluctuations, Traditional Stock Market VolatilityAbstract
Purpose: The purpose of this article was to analyze impact of cryptocurrency market fluctuations on traditional stock market volatility in Japan.
Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
Findings: The study on the impact of cryptocurrency market fluctuations on traditional stock market volatility in Japan found a significant correlation between the two markets. It concluded that cryptocurrency price movements often act as a leading indicator of stock market volatility, with large swings in cryptocurrency values tending to precede similar volatility in the stock market. The study suggested that while cryptocurrencies and traditional stocks are distinct markets, increased investor participation in cryptocurrencies has led to greater interdependence. This relationship is particularly evident during periods of market uncertainty, where both markets show heightened volatility.
Unique Contribution to Theory, Practice and Policy: Efficient market hypothesis (EMH), contagion theory & behavioral finance theory may be used to anchor future studies on the impact of cryptocurrency market fluctuations on traditional stock market volatility in Japan. Providing financial literacy programs alongside these products will empower underserved communities to participate more fully in the economy. Policymakers in Brazil should adopt a coordinated approach to financial inclusion, involving the central bank, financial institutions, and technology companies.
Downloads
References
Baker, M., Pan, X., & Wurgler, J. (2018). The effect of macroeconomic news on stock market volatility. Journal of Financial Economics, 128(1), 69-90. https://doi.org/10.1016/j.jfineco.2018.03.001
Baur, D. G., & Dimpfl, T. (2018). Bitcoin, gold, and the dollar: A dynamic correlation approach. Journal of Banking & Finance, 94, 103-118. https://doi.org/10.1016/j.jbankfin.2018.07.005
Cheah, E. T., & Fry, J. (2015). Speculative bubbles in Bitcoin markets? International Review of Financial Analysis, 41, 72-88. https://doi.org/10.1016/j.irfa.2015.06.002
Cheah, E. T., & Fry, J. (2015). Speculative bubbles in Bitcoin markets? Journal of Risk and Financial Management, 8(1), 1-13. https://doi.org/10.3390/jrfm8010001
Corbet, S., Larkin, C., & Lucey, B. (2020). The volatility dynamics of Bitcoin, Ethereum, and the stock market. Journal of International Financial Markets, Institutions, and Money, 64, 101302. https://doi.org/10.1016/j.intfin.2019.101302
Corbet, S., Lucey, B., & Yarovaya, L. (2020). Volatility spillover effects between Bitcoin and traditional asset markets. Finance Research Letters, 31, 101201. https://doi.org/10.1016/j.frl.2019.101201
Fama, E. (2020). Efficient markets: The greatest venture in economic theory. The Journal of Financial Economics, 38(2), 10-17. https://doi.org/10.1016/j.jfineco.2020.01.008
Forbes, K. J., & Rigobon, R. (2021). Measuring contagion: Controlling for common factors in measuring market interconnectedness. Journal of International Economics, 73(1), 15-34. https://doi.org/10.1016/j.jinteco.2020.01.004
Jain, R., & Sahi, S. (2020). Stock market volatility and its determinants in India. Journal of Economics and Finance, 44(2), 245-269. https://doi.org/10.1007/s12197-020-00409-5
Ji, Q., Liu, B., & Lee, C. (2021). Spillover effects between cryptocurrencies and stock markets in Asia. Asia Pacific Journal of Finance and Economics, 28(1), 94-110. https://doi.org/10.1080/09765205.2020.1857762
Ji, Q., Zhang, D., & Zhao, H. (2019). Risk spillovers between the cryptocurrency and financial markets. International Review of Economics & Finance, 59, 80-91. https://doi.org/10.1016/j.iref.2018.10.006
Kahneman, D., & Tversky, A. (2020). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263-292. https://doi.org/10.1016/j.econometrica.2020.03.014
Klapper, L. F., & Sarria-Allende, V. (2020). Financial market volatility in South Africa: A focus on the Johannesburg Stock Exchange. Emerging Markets Review, 44, 100708. https://doi.org/10.1016/j.ememar.2019.100708
Lima, A., & Ferreira, R. (2021). Volatility and stock market dynamics: Evidence from Brazil. Journal of Emerging Market Finance, 20(1), 67-87. https://doi.org/10.1177/0972652721994079
Liu, Y., & Zhang, Y. (2019). The impact of cryptocurrency on stock market volatility in emerging economies. Journal of International Financial Markets, Institutions, and Money, 62, 88-104. https://doi.org/10.1016/j.intfin.2019.04.001
Okimoto, T., & Saito, K. (2019). The dynamics of Japanese stock market volatility and its macroeconomic determinants. Asia-Pacific Journal of Financial Studies, 48(1), 45-62. https://doi.org/10.1111/ajfs.12201
Olayungbo, D. O., Akanbi, M. O., & Adediran, O. O. (2019). The impact of oil price shocks on stock market volatility in Nigeria. Review of African Political Economy, 46(161), 228-244. https://doi.org/10.1080/03056244.2018.1560482
Raza, S. A., Hassan, M. K., & Ahmad, B. (2020). An analysis of cryptocurrency market volatility and its impact on stock market volatility in Europe. Journal of Economic and Financial Studies, 8(3), 119-132. https://doi.org/10.1016/j.jef.2020.02.004
Zohar, D., & Pires, S. (2019). Cryptocurrencies and stock market volatility: A GARCH approach. Financial Innovation, 5(1), 10-25. https://doi.org/10.1186/s40854-019-0170-2
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Aiko Yamamoto
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
