Exploring the herding behavior of investors in the Non-fungible Tokens (NFTs) and cryptocurrency markets

Xinxin Yu, Sin-Huei Ng () and Moau-Yong Toh
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Xinxin Yu: Xiamen University Malaysia
Sin-Huei Ng: Xiamen University Malaysia
Moau-Yong Toh: Xiamen University Malaysia

Humanities and Social Sciences Communications, 2025, vol. 12, issue 1, 1-15

Abstract: Abstract This paper analyzes the time-varying herding behavior in the non-fungible token (NFTs) and cryptocurrency markets and investigates their interrelationship. Using the daily market data from January 1st, 2020 to April 30th, 2023, our study covers the period characterized by Covid and post-Covid-19 induced global financial market volatility, capturing the dynamics in the global macroeconomic system and the Federal Reserve’s interest rate policy. Based on the rolling window method, our findings show the presence of herding behavior in both markets, where herding behavior in these markets may be influenced by the major events announcements particularly those related to the Federal Reserve's interest rate policy. Vector error correction model (VECM) indicates that the NFT market impacts the price of Ethereum, thereby influencing the broader cryptocurrency market. Such finding contributes to a deeper understanding of the market dynamics. By examining herding behavior, our findings indicate that the NFT market demonstrates relative independence from the volatile prices of the cryptocurrency market, suggesting the potential diversification benefits of incorporating NFTs for investors’ portfolio construction and risk management.

Date: 2025
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DOI: 10.1057/s41599-025-05730-x

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