The Impact of Cryptocurrency Price Fluctuations on Stock Market Returns: Evidence from the Iraq Stock Exchange for the Period 2015-2025
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Abstract
This research aims to analyze the impact of cryptocurrency market volatility on the returns of the Iraq Stock Exchange (ISX) and to construct a quantitative model to estimate the magnitude and direction of this impact over the period from March 19, 2015, to February 9, 2025, using a weekly data series. The GARCH model was employed to identify the degree of Bitcoin return volatility, and the ARDL methodology was used to analyze its implications for the ISX. The results clearly demonstrate a positive impact of cryptocurrencies on ISX returns, indicating their potential as a complementary, rather than a replacement, investment tool for traditional stocks. This reflects a complementary relationship between the two markets, which encourages expanding investment opportunities in both and highlights the importance of integrating cryptocurrencies into modern investment instruments, given the opportunities they offer for hedging and portfolio diversification.
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