The Impact of Macro Regulatory on Cryptocurrency Fluctuation: Evidence from China and the US

Abstract

Bitcoin is the highest market capitalization product among virtual currencies today, attracting investors from all over the world. The attitudes and policies of governments towards bitcoin are a key concern for investors, and policy changes may have some impact on the bitcoin market. In this paper, the main topic is the changes in bitcoin market returns and volatility for different periods (one week, two weeks, and 1 month) after the U.S. and China proposed policies that have a negative impact on bitcoin by using an ARMA-GARCH model. The study shows that in the long-term perspective, the seemingly devastating policies did not generate much volatility in the overall market to shake investors' long-term investment enthusiasm. This study provides countervailing evidence to support investors who are overly concerned about Bitcoin's reduced investment value due to tough government regulation, boosting investor confidence.