Financial implications of fourth industrial revolution: Can bitcoin improve
prospects of energy investment?
#MMPMID32834135
Su CW
; Qin M
; Tao R
; Umar M
Technol Forecast Soc Change
2020[Sep]; 158
(?): 120178
PMID32834135
show ga
Bitcoin and the blockchain technology on which it is based are the key drivers
behind the accelerated pace of Fourth Industrial Revolution in the domain of
Finance. The offshoots of this technology however are not limited and are rapidly
spreading in other domains such as oil market. This paper investigates the
causality or influences that both markets, Bitcoin price (BP) and oil price (OP)
have on each other by applying the bootstrap Granger causal relationship tests
considering full as well as sub-samples. Our analysis reveals that shocks
originated in OP and transmitted towards BP can be both positive or negative. The
positive impact indicates that Bitcoin can be viewed as an asset helpful in
avoiding the risks of the high OP, which also indicates that Bitcoin and oil are
in the same boat, however, the negative effects cannot support this view. The
negative influence of OP on BP can be explained by the burst of the Bitcoin
bubble which has weakened its hedging ability. In turn, there is also a negative
influence or reverse causality running from BP to OP, highlighting that the
demand for oil by investors can be threatened by the increasing BP. Keeping in
view the more integrated and complexed financial dynamics which are the results
of Fourth Industrial Revolution, investors can benefit from this
interrelationship to diversify the risks and optimize their investment by
building a more balanced portfolio. Also, governments could promote and protect
the healthy development of the Bitcoin and energy market by preventing the
Bitcoin bubbles and understanding the reasons of oil price volatility.
free
free
free
