Emotions in the crypto market: Do photos really speak?

Nhan Huynh and Hoa Phan

Finance Research Letters, 2023, vol. 55, issue PB

Abstract: This study examines whether the emotions contained in new photos can affect the cryptocurrency market. Utilizing the daily data on top 100 cryptocurrencies, we find that the surge in ratio of photos comprising pessimistic tones is associated with negative coin returns. Photo sentiment positively predicts subsequent returns and trading intensity, implying the subsequent corrections. The photo sentiment also drives risks up with higher price volatilities. The predictive power is more pronounced during periods of elevated fear proxied by investors’ risk aversion. Our results remain robust with alternative sentiment proxies, risk-adjusted returns, and a battery of subsample analyses.

Keywords: Cryptocurrency market; Investor sentiment; Photo sentiment; Return predictability (search for similar items in EconPapers)
JEL-codes: G11 G13 G17 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:55:y:2023:i:pb:s1544612323003173

DOI: 10.1016/j.frl.2023.103945

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