Spot Bitcoin ETF Approval: A Comparative Analysis of Stock Market Response Across Culture

Purpose: The U.S. SEC’s approval of spot Bitcoin Exchange-Traded Fund (ETF) on 11 January 2024 is a significant milestone in the advancement of cryptocurrency market, carrying significant implications for global financial systems. Therefore, this study aims to examine the impact of approval of spot Bitcoin ETF on stock market behavior in countries with varying levels of Indulgence versus Restraint (IVR) cultural dimension, using a cross-cultural framework. Design/methodology/approach: The sample population in this study comprised a total of 70 stock market indices. In addition, the daily closing prices of each stock exchange index and MSCI All-Country World Equity Index. We use event study to calculate abnormal and cumulate abnormal returns aroung event dates using market model. Findings: The results showed that stock market reacted negatively to this event, particularly in high IVR countries. This was because investors in high-indulgence countries were more open to considering cryptocurrencies as an alternative investment to stock and were adept at adjusting their investment portfolios quickly. Stock market react negatively to the approval spot Bitcoin ETF by U.S. Securities and Exchange Commission. Stock markets in high IVR national culture react more negatively than low IVR. IVR still negatively effects on stock market returns, after controlling macroeconomic factors. Research limitations/implications: Stock market react negatively to the approval spot Bitcoin ETF by U.S. Securities and Exchange Commission. Stock markets in high IVR national culture react more negatively than low IVR. IVR still negatively effects on stock market returns, after controlling macroeconomic factors. Originality/value: This study contributes to the growing body of investigations on cryptocurrencies, specifically Bitcoin, as alternative tools for hedging and safe-haven assets. We also contribute the role of national cultural dimensions on individuals' investment decision-making processes.