Bitcoin Price Co-Movements and Culture

41 Pages Posted: 1 Jul 2020

See all articles by Guglielmo Maria Caporale

Guglielmo Maria Caporale

Brunel University London - Department of Economics and Finance; London South Bank University; CESifo (Center for Economic Studies and Ifo Institute); German Institute for Economic Research (DIW Berlin)

Woo-Young Kang

Brunel University London - Department of Economics and Finance

Date Written: 2020

Abstract

This paper analyses the cultural drivers (tightness−looseness and individualism−collectivism) of Bitcoin prices co-movements and exchange shutdowns in 34 major countries around the world over the period 20 July 2010 – 5 February 2020. Under the assumption that investors prefer to use local or international Bitcoin exchanges accepting the local currency to trade, we find that Bitcoin prices co-move more in countries with tighter and more collectivistic cultures. However, greater connectivity between international Bitcoin exchanges in the form of financial openness reduces the impact of the cultural variables on the behaviour of investors and on Bitcoin price co-movements. Further, the probability of Bitcoin exchanges shutdowns is higher in tighter and more collectivistic cultures where investors are more risk-averse and thus more likely to exhibit herding behaviour.

Keywords: Bitcoin exchanges, cultural analysis, co-movement

JEL Classification: G150, C360

Suggested Citation

Caporale, Guglielmo Maria and Kang, Woo-Young, Bitcoin Price Co-Movements and Culture (2020). CESifo Working Paper No. 8076, Available at SSRN: https://ssrn.com/abstract=3535286 or http://dx.doi.org/10.2139/ssrn.3535286

Guglielmo Maria Caporale (Contact Author)

Brunel University London - Department of Economics and Finance ( email )

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HOME PAGE: http://www.brunel.ac.uk/about/acad/bbs/bbsstaff/ef_staff/guglielmocaporale/

London South Bank University ( email )

Centre for Monetary and Financial Economics
London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Woo-Young Kang

Brunel University London - Department of Economics and Finance ( email )

Kingston Lane
Uxbridge, Middlesex UB8 3PH
United Kingdom

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