Are Cryptocurrency Traders Pioneers or Just Risk-Seekers? Evidence from Brokerage Accounts

10 Pages Posted: 24 Jun 2019

See all articles by Matthias Pelster

Matthias Pelster

Paderborn University

Bastian Breitmayer

Leuphana University of Lueneburg

Tim Hasso

Bond University - Bond Business School

Date Written: June 14, 2019

Abstract

Are cryptocurrency traders driven by a desire to invest in a new asset class to diversify their portfolio or are they merely seeking to increase their levels of risk? To answer this question, we use individual-level brokerage data and study their behavior in stock trading around the time they engage in their first cryptocurrency trade. We find that when engaging in cryptocurrency trading investors simultaneously increase their risk-seeking behavior in stock trading as they increase their trading intensity and use of leverage. The increase in risk-seeking in stocks is particularly pronounced when volatility in cryptocurrency returns is low, suggesting that their overall behavior is driven by excitement-seeking.

Keywords: cryptocurrencies, bitcoin, investor, risk-seeking

JEL Classification: D1, G1

Suggested Citation

Pelster, Matthias and Breitmayer, Bastian and Hasso, Tim, Are Cryptocurrency Traders Pioneers or Just Risk-Seekers? Evidence from Brokerage Accounts (June 14, 2019). Pelster, M., Breitmayer, B., & Hasso, T. (2019). Are cryptocurrency traders pioneers or just risk-seekers? evidence from brokerage accounts. Economics Letters. DOI:10.1016/j.econlet.2019.06.013, Available at SSRN: https://ssrn.com/abstract=3403916

Matthias Pelster

Paderborn University ( email )

Warburger Str. 100
Paderborn, 33098
Germany

Bastian Breitmayer

Leuphana University of Lueneburg ( email )

Scharnhorststraße 1
Wilschenbrucher Weg 69
Lüneburg, 21335
Germany

Tim Hasso (Contact Author)

Bond University - Bond Business School ( email )

Gold Coast
Australia

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