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Small price bias in the cryptocurrency market. A cognitive bias revealed by emotions on social networks

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  • García Londoño, Adriana
  • Alonso Díaz, Santiago

Abstract

Cognitive biases influence cryptocurrency market outcomes. Of relevance for this work, investors react variably to low-priced cryptocurrencies, evident in market outcomes like volatility. We investigate whether low prices also drive emotional responses on Twitter. Results show emotions align with price levels, with stronger reactions to lower prices. We conclude that small prices affect investor emotions.

Suggested Citation

  • García Londoño, Adriana & Alonso Díaz, Santiago, 2024. "Small price bias in the cryptocurrency market. A cognitive bias revealed by emotions on social networks," Finance Research Letters, Elsevier, vol. 69(PA).
    • Handle: RePEc:eee:finlet:v:69:y:2024:i:pa:s154461232401170x
    DOI: 10.1016/j.frl.2024.106141
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    References listed on IDEAS

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    More about this item

    Keywords

    Behavioral Finance; Information; knowledge; and uncertainty; Role and effects of psychological; emotional; social; and cognitive factors on decision making; Cryptocurrencies; Small price bias; Cognitive biases; Number cognition;
    All these keywords.

    JEL classification:

    • G4 - Financial Economics - - Behavioral Finance
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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