The disposition effect in stocks versus bitcoin

Abstract

Cryptocurrencies have become a hot topic in finance: its price swings have gathered attention from investors therefore they have become an appealing asset to hold alongside other financial instruments. Despite this, do cryptocurrencies reflect the same investment behavior as seen in other assets? This paper aims to study irrational behavior with a focus on the disposition effect in stocks and Bitcoin. Is there a disposition effect in cryptocurrencies and, if so, how different are the effects between the two assets? The findings suggest there is disposition effect in Bitcoin, but it is stronger for stocks.