Investing in cryptocurrencies with information costs

Valentinas Rudys and Daniel Svogun

Applied Economics Letters, 2025, vol. 32, issue 3, 365-368

Abstract: Life cycle investment models predict much higher participation and investment in cryptocurrencies than found empirically. We reconcile these differences by introducing information costs for cryptocurrency market participation to a standard consumption-investment life cycle model. Only with increasing per-period cryptocurrency market participation costs, are we able to simulate the observed cryptocurrency market participation patterns. The fact that neither fixed entry nor non-increasing per-period costs are able to replicate the survey findings suggests that other reasons, besides information costs, should be considered to explain lower-than-predicted investing in cryptocurrency.

Date: 2025
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DOI: 10.1080/13504851.2023.2269628

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