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Do cryptocurrencies feel the music?

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  • Hadhri, Sinda

Abstract

The aim of this paper is to examine the influence of global mood on cryptocurrencies trading activity. Following an original way, we construct a real-time language-free proxy of sentiment on the basis of songs investors choose to listen to. We use a sample of daily data spanning a period of four years and we find that our music-based measure is a reliable proxy of sentiment being responsive to mood swings of individuals. Interestingly, we show that music sentiment is negatively and significantly correlated with contemporaneous trading volume and price volatility, does not suffer from a recall bias, is not driven by any specific cryptocurrency and is robust to listeners' preferences. The effect is significantly persistent to up to four lags for price volatility and reverts at day 3 with respect to trading volume.

Suggested Citation

  • Hadhri, Sinda, 2023. "Do cryptocurrencies feel the music?," International Review of Financial Analysis, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:finana:v:89:y:2023:i:c:s1057521923002958
    DOI: 10.1016/j.irfa.2023.102779
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