Abstract
•We analyze the prospect of cryptocurrency regulation affects cryptocurrency prices, volatility and trading.•We use Google Trend technique to construct the Crypto Regulation Sentiment Index (CRSX).•CRSX is reflecting investors’ attitude towards Crypto regulation: globally and for the US.•We find CRSX has no statistically significant long-term impact on cryptocurrency prices.•Our finding is consistent with investors having overly positive attitudes towards crypto assets, making crypto a “Wall Street Darling”.•CRSX has a large impact on cryptocurrency price volatility and trading volume.•The effects of CSRX on crypto markets largely depends on the coin's key blockchain characteristics.
We analyze the prospect of cryptocurrency regulation affects cryptocurrency prices, volatility and trading using the Google Trend technique to construct the Crypto Regulation Sentiment Index (CRSX) reflecting investors’ attitude towards Crypto regulation. Our analysis encompasses over 75% of the crypto market's daily activity. We find CRSX has no statistically significant long-term impact on cryptocurrency prices, consistent with investors having overly positive attitudes towards crypto assets, making crypto a “Wall Street Darling”. Nonetheless, CRSX has a large impact on cryptocurrency price volatility and trading volume. The effects of CSRX on crypto markets largely depends on the coin's key blockchain characteristics.
