The transformative power of volume threshold on price movement: A study in the crypto asset market

With the evolution of internet technology and the widespread adoption of electronic commerce applications, money has also become virtual. Virtual currencies, particularly Bitcoin, have laid the foundation for a digital financial environment operating outside traditional banking systems. The emergence of cryptocurrencies has been accompanied by a noticeable decrease in physical currency usage and an increase in digital currency transactions. This trend supports the notion that common currency units could emerge between countries. The storage and security of cryptocurrencies are ensured through blockchain technology, a database that facilitates the tracking of encrypted transactions. It has begun to replace dollar-based transactions in numerous exchanges worldwide. The advent of Bitcoin marks the beginning of a new era in the financial world. However, Bitcoin is no longer the sole player in this field; many alternative digital currencies, known as altcoins, have emerged. Popular altcoins such as Ethereum, Ripple, and Litecoin have developed applications beyond Bitcoin by offering different features. The proliferation of altcoins and their effects on Bitcoin prices have become significant areas of research. Non-linear time series models are utilized to examine the complex relationships and impacts within the cryptocurrency market. This study employs the Threshold Autoregressive (TAR) model to investigate the potential influence of Bitcoin volume on altcoin prices. This model is seen as an appropriate approach to explain complex market dynamics. In conclusion, this study represents an important step towards understanding the impact of Bitcoin on altcoin prices. Findings suggest that a specific threshold in volume has been identified within trading volumes, and it has been found that when Bitcoin reaches this threshold, a regime change in Avalanche price parity occurs. The insights gained from this research could provide valuable information for investors, academics, and policymakers alike.