Metaverse tokens or metaverse stocks - Who's the boss?

The purpose of this article is to explore the relationship between metaverse stocks and metaverse crypto price fluctuations and spillovers. We use a TVP-VAR approach to examine the relationship between metaverse stocks and metaverse crypto, along with Bitcoin and Ethereum. Using a network design, we investigate whether metaverse tokens or metaverse stocks determine the return spillovers. Our main findings show that metaverse stocks are strongly influenced by fluctuations and return shocks from metaverse tokens and cryptocurrencies. In contrast, metaverse tokens are mainly affected by their own innovations and their crypto relatives, namely, Bitcoin and Ethereum, and to a lesser extent by the leading firms operating in the metaverse. From an investing perspective, the results show that metaverse tokens may offer diversification benefits to metaverse stocks, except in times of conflict, such as the Ukraine-Russia war, when returns of both stocks and cryptocurrencies tend to converge.