A note on the relationship between digital assets and the energy markets: new evidence from the most prominent crypto heists

We explore volatility spillover effects between mainstream cryptocurrencies and energy token markets in the 120 days following three notable Blockchain bridge heists in 2022. Using the DCC-GARCH model, we find significant spillover effects between Bitcoin, Ethereum, and energy tokens like Power Ledger Token and Energy Web Token post-heists. This indicates heightened investor concern and panic trading impacting cryptocurrencies and energy token markets. Our analysis also reveals a herding behaviour in energy tokens under market stress and increased liquidity issues, leading to broader market quality deterioration. Based on these findings, we propose regulatory enhancements and the 'Energy Future Fund' to support the stability and growth of energy token markets.