The bitcoin market reaction to the launch of central bank digital currencies

Abstract

In this paper, we employ an event study approach to empirically investigate the reaction of the Bitcoin market to the launch of the Bahamas central bank digital currency (SANDDollar) and the Nigeria central bank digital currency (eNaira). Following event windows, the analysis of abnormal returns and their cumulative abnormal returns showed that the reaction of the Bitcoin returns was stronger toward the launch of the Bahamas CBDC than the Nigeria CBDC. Our findings contribute to the extant literature by providing new insights into the relationship between an effective CBDC launch and the Bitcoin market.