Gambling Behaviour in the Cryptocurrency Market

Chamil W. Senarathne
Additional contact information
Chamil W. Senarathne: Wuhan University of Technology, China

International Journal of Applied Behavioral Economics (IJABE), 2019, vol. 8, issue 4, 1-16

Abstract: This article examines whether the investment strategies of cryptocurrency market involve high-risk gambling. Results show that the cryptocurrency risk premiums co-move closely with the return on CBOE Volatility Index (VIX). As such, the strategies of cryptocurrency trading closely resemble that of high-risk gambling. In other words, traders' expectations co-move closely (significantly) with the expected future payoffs from gambling. The co-movement is more pronounced when the gambling offers gains rather than losses and the payoffs are above average. VIX index returns significantly Granger-cause CSAD of returns (with and without Bitcoin) indicates that the cryptocurrency trading constitutes a form of gambling where the motivation for gambling comes from the amount of variation (i.e. riskiness) in the gambling payoffs. These findings warrant policymakers of countries to revisit the existing regulatory framework governing the conduct of electronic finance in the financial services industry.

Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
http://services.igi-global.com/resolvedoi/resolve. ... 018/IJABE.2019100101 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:igg:jabe00:v:8:y:2019:i:4:p:1-16

Access Statistics for this article

International Journal of Applied Behavioral Economics (IJABE) is currently edited by Yun Wan

More articles in International Journal of Applied Behavioral Economics (IJABE) from IGI Global
Bibliographic data for series maintained by Journal Editor ().