Crypto Trading and Bitcoin Prices: Evidence from a New Database of Retail Adoption

Raphael Auer, Giulio Cornelli, Sebastian Doerr, Jon Frost, Leonardo Gambacorta and Raphael A. Auer
Authors registered in the RePEc Author Service: Raphael Auer

No 10266, CESifo Working Paper Series from CESifo

Abstract: Prices for cryptocurrencies have undergone multiple boom-bust cycles, together with ongoing entry by retail investors. To investigate the drivers of crypto adoption, we assemble a novel database (made available with this paper) on retail use of crypto exchange apps at daily frequency for 95 countries over 2015–22. We show that a rising Bitcoin price is followed by the entry of new users. About 40% of these new users are men under 35, commonly identified as the most “risk-seeking” segment of the population. We confirm these findings by exploiting two exogenous price shocks: the crackdown of Chinese authorities on crypto mining in mid-2021 and the social unrest in Kazakhstan in early 2022. Moreover, we find that when prices rise retail investors buy, while the largest holders sell — making a return at the smaller users’ expense. Overall, back of the envelope calculations suggest that around three-quarters of users have lost money on their Bitcoin investments.

Keywords: Bitcoin; cryptocurrencies; cryptoassets; regulation; decentralised finance; DeFi; retail investment (search for similar items in EconPapers)
JEL-codes: E42 E51 E58 F31 G28 L50 O32 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-ban, nep-fmk, nep-mon and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Crypto trading and Bitcoin prices: evidence from a new database of retail adoption (2023)
Working Paper: Crypto trading and Bitcoin prices: evidence from a new database of retail adoption (2022)
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