Are Cryptocurrencies Good Investments?

Abstract

This paper provides a comprehensive overview of cryptocurrencies, including the origin of cryptocurrencies, how cryptocurrencies operate, and the current situation of cryptocurrencies. In addition, we also provide the performance comparison of major cryptocurrencies with the performance of the stock market indexes. All the cryptocurrencies exhibit higher average returns and volatility than the stock market indexes, which appeals to risk-taking investors. We then perform additional analysis on the determinants of cryptocurrencies returns. We show that major fundamental variables are less likely to affect the returns of cryptocurrencies except for the S&P 500 index returns and the exchange rates between U.S. dollars and Euros.

Keywords

• cryptocurrencies
• market indexes
• fundamentals
• performance