Herding behaviour in Korea's cryptocurrency market

Herding behaviour is an interesting phenomenon that has a serious impact on the market, leading to inefficient asset prices and high volatility in periods of market turmoil. We analysed the existence of herding behaviour in the cryptocurrency market using hourly price data of eight major cryptocurre...

Full description

Saved in:
Bibliographic Details
Published in:Applied economics 2022-05, Vol.54 (24), p.2795-2809
Main Authors: Choi, Ki-Hong, Kang, Sang Hoon, Yoon, Seong-Min
Format: Article
Language:English
Subjects:
anti-herding
Behavior
cryptocurrency
CSAD approach
Digital currencies
Economic analysis
Economic theory
Fear & phobias
Herding behaviour
Prices
Trading
Volatility
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Herding behaviour is an interesting phenomenon that has a serious impact on the market, leading to inefficient asset prices and high volatility in periods of market turmoil. We analysed the existence of herding behaviour in the cryptocurrency market using hourly price data of eight major cryptocurrencies and the cross-sectional standard absolute deviation (CSAD) approach. Our findings showed anti-herding behaviour at shorter time intervals and herding behaviour during longer periods. The trading decisions of cryptocurrency investors mimic the behaviour of other traders over time. We further found that herding behaviour is stronger over longer time intervals in a down market. When a market is declining, it suggests that fear increases and investors are forced to act quickly in response to market movements rather than using their information. Thus, investors need to fix the situation as quickly as possible to avoid making losses, hence they need to make rational choices based on knowledge rather than emotion or fear.
ISSN:0003-6846
1466-4283
DOI:10.1080/00036846.2021.1998335