Trading Cryptocurrencies as a Pandemic Pastime: COVID-19 Lockdowns and Bitcoin Volume

Alexander Guzmán, Christian Pinto-Gutiérrez and María-Andrea Trujillo
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Alexander Guzmán: CESA School of Business, Bogotá 110311, Colombia
Christian Pinto-Gutiérrez: Faculty of Business and Economics, Universidad de Talca, Talca 3460000, Chile
María-Andrea Trujillo: CESA School of Business, Bogotá 110311, Colombia

Mathematics, 2021, vol. 9, issue 15, 1-15

Abstract: This paper examines the impact of COVID-19 lockdowns on Bitcoin trading volume. Using data from Apple mobility trends and several time-series econometric models, we find that investors became active participants during the COVID-19 pandemic period and traded more bitcoins on days with low mobility associated with lockdown mandates. These results remain robust after controlling for stocks and gold returns, the VIX index, and the level of attention and sentiment toward Bitcoin, as measured by Google search frequencies and the tone of Tweets discussing Bitcoin. These results suggest that when individual investors have ample free time on their hands, they trade cryptocurrencies as a pastime and use the Bitcoin market as a form of entertainment. Moreover, our results have important implications concerning investors’ herding behavior and overconfidence leading to noise trader risks and bubbles typically accompanied by high trading volume in cryptocurrency markets.

Keywords: Bitcoin; trading; volume; COVID-19; lockdowns; investor attention (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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