Year: 2025
Type: article
Abstract: The FTX collapse marked a significant shock to global crypto markets, prompting concerns about systemic contagion. This paper investigates the dynamic connectedness between cryptocurrencies, DeFi tokens, and tech stocks, focusing on the systemic impact of the FTX collapse. We decompose total, internal, and external connectedness across asset groups using a time-varying parameter VAR model. The results show that post-FTX, Bitcoin and Ethereum intensified their roles as core shock transmitters, while Tether consistently acted as a volatility absorber. DeFi tokens exhibited heightened intra-group spillovers and occasional external influence, reflecting structural fragility. Tech stocks remained largely insulated, with reduced cross-market linkages. Network visualizations confirm a post-crisis fragmentation, characterized by denser internal crypto-DeFi ties and weaker inter-group contagion. These findings have important policy implications for regulators, investors, and system designers, indicating the need for targeted risk monitoring and governance within decentralized finance.
DOI: 10.3390/ijfs13030169
Authors: Nader Naifar, Mohammed S. Makni
Institution: Imam Mohammad ibn Saud Islamic University
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $2,172
OpenAlex ID: W4414209593