Dynamic Impact of the Covid-19 on Cryptocurrency and Investment Suggestion

Under the external impact of the COVID-19 epidemic, traditional financial markets have been negatively affected. In order to further explore the impact of COVID-19 on the cryptocurrency market price and investment, this paper adopts the comparative experiment method and use the ARIMA model to build the price trend of cryptocurrency before the outbreak point as a control group without COVID-19, and compares it with the real price trend of cryptocurrency affected by COVID-19 as an experimental group. Studies have found that external shocks such as the COVID-19 pandemic can cause cryptocurrency prices to rise significantly in the short term and lead to overreactions. Within a month after the shock occurs, the price converges to an equilibrium price that is higher than the initial price. This shows that when external shocks such as the COVID-19 pandemic occur, investors can increase their positions in cryptocurrencies to increase their safe-haven assets, and policymakers need to adopt opposite market policies for traditional financial markets and cryptocurrency markets in order to prevent large cash flows from traditional financial markets to cryptocurrency markets, which may result in increased instability in both. This paper has constructive significance for investors’ rational investment behavior and policymakers’ efficient market policy methods when external shocks such as COVID-19 occur.