Investigating the Spillover Effects of Selected Digital Currencies with an Emphasis on Their Impact on Gold in the Era Before and After the Covid-19 Pandemic and the Role of the Government (Applying the Wavelet Coherence Approach)

The history of cryptocurrency began in 2008 as a way of payment. However, cryptocurrencies have evolved into a complex ecosystem of high-yielding speculative assets. Unlike traditional financial instruments, these currencies are not mainly traded in organized and law-abiding locations, but on online platforms where anonymity prevails. In fact, facilitating financial transactions without the presence of intermediaries such as banks and financial institutions can be considered one of the goals of creating virtual money. The purpose of this research is to investigate the effects of Bitcoin as the largest digital currency before (16/08/2015 to 16/11/2019) and after the Covid-19 pandemic (17/11/2019 to 26/02/2022) on Other digital currencies and gold. One of the components of this analysis is the identification of selected digital currencies that have had the greatest impact from the price bubbles and the fall of the price of Bitcoin, as well as the investigation of the origin of the investment of digital currencies and gold. The results show that among digital currencies, Bitcoin, as a representative of the digital currency index, has the most spillover effects on Litecoin, Ethereum, and Dash, and has the least spillover effects on Dogecoin and Ripple. Also, as an investable asset, gold is a safe haven for investment, because it is less aligned with volatile assets like Bitcoin compared to other digital currencies. Based on the results of the current research, the bubbles in the digital currency market show the irrationality of the market, and due to the existing spillover effects, they may spread to the domestic financial markets and cause a lot of fluctuations.