Effect of Russia–Ukraine war sentiment on blockchain and FinTech stocks

Abstract

This paper develops a Russia-Ukraine War and Economic Sanctions Sentiment Index (RUWESsent) to reflect the public sentiment and reaction to economic sanction news based on Twitter Sentiments, Google Trend, Wikipedia Trend, and News Sentiments. We then investigate the effect of our proposed aggregate measure of war and economic sanctions induced sentiment on the blockchain and Fintech stocks.Using quantile-on-quantile regression, we document that RUWESsent has positive (negative) effect on the returns of FinTech and blockchain market stocks in a bullish (bearish) market state. The result of the rolling window wavelet correlation finds a higher negative correlation immediately after the invasion, with further results revealing that negative sentiments negatively impact FinTech and blockchain markets' returns. Furthermore, the time-frequency quantile VAR approach shows that RUWESsent is the major transmitter of shock in the network. Our findings imply that negative sentiment induces irrational investor behavior and increases noise trader loss aversion and herding behavior. Our findings have significant implications for investors and policy makers during geopolitical crises.