Are cryptos different? Evidence from retail trading

Shimon Kogan, Igor Makarov, Marina Niessner and Antoinette Schoar

Journal of Financial Economics, 2024, vol. 159, issue C

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.

Keywords: Cryptocurrencies; FinTech; Retail trading; Social finance (search for similar items in EconPapers)
JEL-codes: G12 G14 G41 (search for similar items in EconPapers)
Date: 2024
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:jfinec:v:159:y:2024:i:c:s0304405x2400120x

DOI: 10.1016/j.jfineco.2024.103897

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