A flight-to-safety from Bitcoin to stock markets: Evidence from cyber attacks

Fang, Y., Chen, C.Y.H and Jiang, C 2025. A flight-to-safety from Bitcoin to stock markets: Evidence from cyber attacks. International Review of Financial Analysis. 103 104093. https://doi.org/10.1016/j.irfa.2025.104093

TitleA flight-to-safety from Bitcoin to stock markets: Evidence from cyber attacks
TypeJournal article
AuthorsFang, Y., Chen, C.Y.H and Jiang, C
Abstract

We discover a novel flight-to-safety (FTS) effect from cryptocurrency markets to stock markets, triggered by a series of hacking attacks on cryptocurrency exchanges. This phenomenon is driven by heightened uncertainty, which increases investors’ risk awareness and prompts asset reallocation in favour of safer stock markets over riskier cryptocurrency markets. We conduct an extensive global examination of this effect across 39 countries and confirm this novelty. This effect is amplified by frequent attacks when investors’ risk awareness is strengthened. Notably, social media sentiment surrounding these attacks serves as both a timely warning indicator for upcoming hacking events and a measure of the FTS pressure following such attacks. We conclude that the collapsed investor confidence and increased risk aversion are the primary cause of such an effect. We further substantiate the FTS hypothesis by offering evidence of significant abnormal fund flows into US mutual funds following these hacking events. As such, through the lens of cyber attacks, we document how a shock in cryptocurrency markets is transmitted into stock markets via investors’ FTS behaviour.

KeywordsCyber-crime
Cryptocurrency
Flight-to-safety
Stock market
Social media
Article number104093
JournalInternational Review of Financial Analysis
Journal citation103
ISSN1057-5219
Year2025
PublisherElsevier
Publisher's version
License
CC BY-NC-ND 4.0
File Access Level
Open (open metadata and files)
Digital Object Identifier (DOI)https://doi.org/10.1016/j.irfa.2025.104093
Web address (URL)https://www.sciencedirect.com/science/article/pii/S1057521925001802?via%3Dihub
Publication dates
Published online24 Mar 2025
Published in printJul 2025

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