Does the cryptocurrency market exhibits feedback trading

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.