Are cryptos different? Evidence from retail trading

Kogana, Shimon, Makarov, Igor ORCID: 0009-0006-7557-449X, Niessnerc, Marina and Schoar, Antoinette (2024) Are cryptos different? Evidence from retail trading. Journal of Financial Economics, 159. ISSN 0304-405X

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Abstract

Trading in cryptocurrencies grew rapidly over the last decade, dominated by retail investors. Using data from eToro, we show that retail traders are contrarian in stocks and gold, yet the same traders follow a momentum-like strategy in cryptocurrencies. The differences are not explained by individual characteristics, investor composition, inattention, differences in fees, or preference for lottery-like assets. We conjecture that retail investors have a model where cryptocurrency price changes affect the likelihood of future widespread adoption, which leads them to further update their price expectations in the same direction.

Item Type:	Article
Official URL:	https://www.sciencedirect.com/journal/journal-of-f...
Additional Information:	© 2024 The Authors
Divisions:	Finance
Subjects:	H Social Sciences > HG Finance
JEL classification:	G - Financial Economics > G1 - General Financial Markets > G12 - Asset Pricing; Trading volume; Bond Interest Rates G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency; Event Studies
Date Deposited:	11 Mar 2024 14:45
Last Modified:	15 Nov 2024 03:30
URI:	http://eprints.lse.ac.uk/id/eprint/122266

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