Examining the bidirectional ripple effects in the NFT markets: Risky center or hedging center?

Xu Zhang, Muhammad Abubakr Naeem, Yuting Du, Abdul Rauf

Research output: Contribution to journalArticlepeer-review

7 Citations (Scopus)

Abstract

This study introduces a novel bidirectional ripple effect method to identify the risky center, hedging center, and duration of ripple effects. This method is used to examine the static and dynamic ripple effects among NFTs using idiosyncratic volatility measures. The findings indicate that, overall, correlations and bidirectional ripple effects among NFTs are prominent over the sample period. Only a few NFTs are significant ripple centers. Decentraland is a significant risky center, while CryptoVoxels serves as a reliable hedging center. The outcomes of rolling window tests and durations reveal that the central role of NFTs varies over time. The findings also show that ripple effects have significant durations. These conclusions hold considerable importance for NFT investors in making investment choices and managing risks.

Original languageEnglish
Article number100904
JournalJournal of Behavioral and Experimental Finance
Volume41
DOIs
Publication statusPublished - Mar 2024
Externally publishedYes

Keywords

  • Bidirectional ripple effect
  • Duration
  • Hedging center
  • NFT
  • Risky center

ASJC Scopus subject areas

  • Finance

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