Bitcoin Price Co-Movements and Culture
41 Pages Posted: 1 Jul 2020
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: Suggested Citation