The Psychology of Cryptocurrency Prices
9 Pages Posted: 3 Jan 2019 Last revised: 16 May 2019
Date Written: May 8, 2019
This letter analyzes the dynamic of cryptocurrency prices through the lens of behavioral economics. Cryptocurrency market participants seem to behave irrationally. We provide evidence of the presence of significant small price bias for the cryptocurrency market, consistent with the hypothesis that investors react to the news differently according to the price-level. We find that low-priced cryptocurrencies are much more volatile than their high-priced counterparts.
Keywords: Investor Psychology; Behavioral Biases; Cryptocurrency; Price; Volatility
JEL Classification: G41; G12
Suggested Citation: Suggested Citation