Analysis of Regulation Policies in May 2021 on Cryptocurrency Market

In May 2021, Chinese government issued a series of policies to strengthen the supervision of cryptocurrency market. Based on the principle of event study and combing of Chinese and American cryptocurrency policies, this paper selects May 18 as the event announcement day and constant mean return models are constructed to measure the abnormal returns of top ten market value coins. It is found that the strengthening of regulatory policies had an evidently negative influence on the market. Combined with the analysis of the features of typical cryptocurrencies, this paper figures out that on the whole there is a strong correlation between the abnormal returns of currencies in the cryptocurrency market. At the same time, by analyzing the performance of daily abnormal returns of Bitcoin and Ether in the event window, this study draws a conclusion that investors in that market have patent speculativeness. In addition, complimentary survey on stable coin is also done to verify the overall policy impact, which indicates that the market value fluctuation of stable coin is consistent with the abnormal return changes of the whole market. On this basis, through information query and literature reference, this paper also forecasts the evolution trend of regulatory policies in various countries and the development of the overall cryptocurrency market by period.