Digital currencies as an alternative investment

Abstract

Purpose: The study intends to examine the movement of digital currency prices over time and compare it to the movement of financial indicators in various stock exchanges to determine whether or not modern digital currencies can represent a global alternative to investing in financial stock exchanges, given their low transaction costs and information confidentiality, which makes them more appealing to some investors. Hypotheses: The research is based on testing two basic hypotheses (1) There is no statistically significant relationship between the movement of digital currency prices and stock index fluctuations. (2) Digital currencies cannot be used as a substitute for stock market investing. Methodology: The statistical study was conducted from January 1, 2010, to July 15, 2022, using a sample of thirteen MENA region countries' indices, as well as three global indices represented by Nasdaq, Dow Jones, and American Standard & Poor's, to represent the fluctuations of these indices. The movements of financial stock exchanges, as well as the ten most active digital currencies in terms of transaction volume at the time of the research, were used as indicators. The STATA statistical program was also employed for correlation analyses. Results: Standard deviations of samples showed that traditional currency markets are more stable than virtual ones. Because of this, it's clear that financial stock exchange traders can't use digital currencies as an alternative investment.