Who buys cryptos during uncertain times?
By Prachi Deuskar, Vasudha Nukala, Vasundhara Sharma
Citation
Deuskar, Prachi., Nukala, Vasudha., Sharma, Vasundhara. (2024). Who buys cryptos during uncertain times? .
Copyright
2024
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Abstract
Literature finds that Economic policy uncertainty (EPU) leads to lower value, greater volatility, and flight-to-safety selling in traditional risky assets. In contrast, we find that EPU is associated with positive news sentiment, lower volatility, and higher returns in cryptocurrencies. Accordingly, large traders buy Bitcoin following higher EPU, a response to EPU opposite to that in traditional risky assets. Surprisingly, small traders are net crypto sellers when EPU is high. A drop in retail investors’ appetite for equities explains this behavior. Thus, concerning EPU, large traders understand the diversifying benefits of cryptos, but small traders treat them like conventional risky assets.

Vasudha Nukala is an Assistant Professor of Finance at the Indian School of Business (ISB). Her research focuses on how external forces such as policy shocks or technological developments disrupt the financial processes. In particular, she studies the impact of these forces on lending to both firms and households. 
Professor Nukala holds a PhD from the Olin Business School at Washington University in St. Louis.  She also holds a B.E. (Hons) in Electronics and Instrumentation and an M.Sc. (Hons) in Economics from BITS Pilani, as well as an MS in Finance from the Simon Business School, University of Rochester.

Vasudha Nukala
Vasudha Nukala

Vasundhara Sharma is an Assistant Professor of Information Systems at the Indian School of Business (ISB). She obtained her PhD in Risk and Operations Management from the McCombs School of Business, University of Texas at Austin. Her research primarily focuses on open and decentralised innovation and business models. She also works in the areas of cryptocurrencies and blockchain applications. 
Prior to her doctoral studies, Professor Sharma worked as an Analyst at Goldman Sachs. She holds a B.E. in Computer Science from Birla Institute of Technology, Mesra, and completed an exchange semester at Mannheim University of Applied Sciences.

Vasundhara Sharma
Vasundhara Sharma