The 10th International P2PFISY Workshop 2024 is being held in Dubai Learn More
Rod Garratt
Maarten Van Oordt
Bank for International Settlements (BIS), Vrije Universiteit Amsterdam, Tinbergen Institute
2023
The Crypto Multiplier

The exchange rates of cryptocurrencies are highly volatile. This paper provides insight into the source of this volatility by developing the concept of a “crypto multiplier,” which measures the equilibrium response of a cryptocurrency’s market capitalisation to aggregate inflows and outflows of investors’ funds. The analysis explains why announcements by large investors, celebrity endorsements or financial crises can result in substantial price movements.