An Investigation of Cryptocurrencies: Behavior Finance Perspective

Abstract

The cryptocurrency market has ignited heated debates since its large fluctuation during 2013. This project first discusses a brief connection in certain representative cryptocurrency assets, with certain properties raising from the fields of behavior finance. Then I study the link between behaviors in cryptocurrency market with these properties using event study analysis. In order to proxy such behaviors, I extract confidence and uncertainty index which is a proxy of fully rational measurement and any deviations would imply the space of behavior finance theories. I discuss how such measurements could explain various individuals' reactions to cryptocurrencies both quantitatively and qualitatively.