Market Volatility Assessment—A Comparative Study Between Cryptocurrencies and the Nifty 50 Indices

Abstract

Financial instruments are subjected to market volatility and volatility helps in evaluating the risk, return and uncertainty associated with the investment. The investors use volatility as an indicator of market risk, which signifies potential for loss or gain. In this paper we have made an attempt to analyze volatility pattern between cryptocurrency, a new age digital asset class and NIFTY 50 Index. We have computed daily returns, Sharpe ratio and volatility metrics (e.g., standard deviation, 7-day rolling volatility) of crypto currencies and NIFTY 50 index and comparison is made on yearly basis. The aim of this research paper is to assess and compare the performance, volatility, and investment attractiveness of 4 major cryptocurrencies (BTC, ETH, SOL, XRP) against Nifty 50, covering (2020-2024) market cycles, global events the COVID-19 Pandemic, regulation changes, increased adoption. For the study purposive sampling has been used to gather data from nift-50 index and 4 most liquid cryptocurrencies. Microsoft excel has been used for initial data cleaning and visualizations and correlation metrics are created using python. The study has revealed that cryptocurrency is more volatile with high return as compared to the low to moderate volatile Nifty 50 Index.