Could Stable Currency Really Stabilize the Cryptocurrency Markets? A Quantile Regression Approach Based on Tether USD

Our paper is the first attempt to exam the stable currency’s impact on the cryptocurrency market by using the the quantile ARDL-ECM (QARDL-ECM) and the quantile-in-quantile ARDL-ECM (QQARDL-ECM) models, we find that the USTD supply is positively related to cryptocurrency prices in the long run, while in the short-term, more USTD supply could support the cryptocurrency market when the market in the downturn period, but exacerbated price rises in the boom market. We focus on the USTD and 4 leading cryptocurrencies (Bitcoin, Litecoin, Ethereum, Ripple) that constitute 82.53% of the overall cryptocurrency market capitalization, the daily USTD supply and cryptocurrencies close price data are collected from the CoinMarketCap (https://coinmarketcap.com), the world’s most recognizable cryptocurrencies data provider. The sample period is from 2015-08-08 to 2019-08-07, with a total number of 1462 observations, since we get the price data for all the cryptocurrencies since 2015-08-08. Natural logarithmic series based on USTD supply and the cryptocurrencies’s closing prices are adopted to control for the possible exponential growth trend.