The Impact of Cryptocurrencies on the Stock Market Performance of Nigeria

A comparative analysis was conducted to distinguish the impact of Bitcoin on the Nigerian Stock Exchange. For analysis, daily Bitcoin and Nigerian stock market indices were used for the period 6 May 2013 – 6 May 2019. Three methods were used to achieve the aim of the study. Firstly, several unit root tests were conducted to confirm the integration order to find whether the variables are stationary or not and if the data have a constant covariance and variance over time. Secondly, QR was used as a method to solve various problems related to modern economics and finance. However, it can help to get a better picture of the factors that influence individual happiness, while traditional regressions focus on the mean. Finally, the recently developed quantile on quantile (QQR) approach (Sim and Zhou, 2015) was used. Compared to previous methods, the QQR approach can provide a broader and more complete picture of the overall pattern of dependence structure between the variables under investigation. which is an extension of the ordinary and standard quantile regression model that allows the evaluation of the effects of the quantile of one variable on the other. Moreover, results of quantile regression show that Bitcoin returns affect Nigerian stock exchange returns only in the upper quantiles negatively, while the quantile-on-quantile regression results suggest that there are substantial areas in the Nigerian stock return distributions and Bitcoin return distributions where these variables appear to be uncoupled. To improve the financial system's performance and increase Nigeria's economic wellbeing, policymakers should evaluate the chances given to investors in the cryptocurrency market and replicate them in the stock market.