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Does the cryptocurrency market exhibits feedback trading?

Author

Listed:
  • Paulo Vitor Jordão da Gama Silva

    (Pontifical Catholic University of Rio de Janeiro)

  • Augusto F.C. Neto

    (PUC-RIO)

  • Marcelo Cabus Klotzle

    (Pontifical Catholic University of Rio de Janeiro)

  • Antonio Carlos Figueiredo pinto

    (Pontifical Catholic University of Rio de Janeiro)

  • Leonardo Lima Gomes

    (Professor at IAG/PUC-RIO)

Abstract

Research has shown that behavioral anomalies affect investors' choices and decisions in the financial markets. One such behavioral anomaly is feedback trading, a phenomenon wherein the investor uses past data to make future decisions. Using Sentana and Wadhwani's (1992) methodology, the 50 most liquid digital currencies (with the most extensive daily data reporting) were analyzed during the period 2013–2018. Results analysis suggests negative feedback trading in Tether Dollar and positive feedback trading in Bitcoin, Ethereum, CassinoCoin and ECC.

Suggested Citation

  • Paulo Vitor Jordão da Gama Silva & Augusto F.C. Neto & Marcelo Cabus Klotzle & Antonio Carlos Figueiredo pinto & Leonardo Lima Gomes, 2019. "Does the cryptocurrency market exhibits feedback trading?," Economics Bulletin, AccessEcon, vol. 39(4), pages 2830-2838.
    • Handle: RePEc:ebl:ecbull:eb-19-00772
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    References listed on IDEAS

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    Cited by:

    1. Fotini Economou & Konstantinos Gavriilidis & Bartosz Gebka & Vasileios Kallinterakis, 2022. "Feedback trading: a review of theory and empirical evidence," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 15(4), pages 429-476, February.
    2. Wang, Jying-Nan & Lee, Yen-Hsien & Liu, Hung-Chun & Lee, Ming-Chih, 2022. "The determinants of positive feedback trading behaviors in Bitcoin markets," Finance Research Letters, Elsevier, vol. 45(C).
    3. Tan, Xilong & Tao, Yubo, 2023. "Trend-based forecast of cryptocurrency returns," Economic Modelling, Elsevier, vol. 124(C).
    4. Goodell, John W. & Goutte, Stephane, 2021. "Diversifying equity with cryptocurrencies during COVID-19," International Review of Financial Analysis, Elsevier, vol. 76(C).

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    More about this item

    Keywords

    Cryptocurrency; Feedback Trading; Behavioral Finance;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • F3 - International Economics - - International Finance

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