Are cryptos different? Evidence from retail trading

Shimon Kogana, Igor Makarov, Marina Niessnerc and Antoinette Schoar

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2024-09-01
New Economics Papers: this item is included in nep-mst and nep-pay
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Published in Journal of Financial Economics, 1, September, 2024, 159. ISSN: 0304-405X

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:122266

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