Do investors feedback trade in the Bitcoin-and why?

We empirically examine whether feedback traders are active in the Bitcoin and the extent to which their presence is affected by a series of noise-related factors (sentiment; volume; liquidity) at three different frequencies (hourly; daily; weekly) for the April 2013-July 2019 period based on Bitstam...

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Bibliographic Details
Published in:The European journal of finance 2024-11, Vol.30 (16), p.1951-1971
Main Authors: Karaa, Rabaa, Slim, Skander, Goodell, John W., Goyal, Abhinav, Kallinterakis, Vasileios
Format: Article
Language:English
Subjects:
Bitcoin
Digital currencies
Feedback
Feedback trading
Liquidity
Noise
sentiment
Trading
volume
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Summary:We empirically examine whether feedback traders are active in the Bitcoin and the extent to which their presence is affected by a series of noise-related factors (sentiment; volume; liquidity) at three different frequencies (hourly; daily; weekly) for the April 2013-July 2019 period based on Bitstamp data. Our findings suggest that positive feedback trading grows stronger for higher (hourly; daily) frequencies, with its presence manifesting itself mainly during periods of high/improving sentiment and high/rising volume/liquidity. Additional tests reveal that the significance of hourly feedback trading is identified during hours corresponding to the trading hours of major European/North American markets. Overall, our results confirm extant literature evidence on the prevalence of noise trading in cryptocurrencies, while further showcasing that the factors motivating feedback trading in other asset classes (equities; ETFs; futures) exhibit similar effects over the presence of feedback traders in the cryptocurrency market.
ISSN:1351-847X
1466-4364
DOI:10.1080/1351847X.2021.1973054