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Do investors feedback trade in the Bitcoin—and why?

Karaa, R.; Slim, S.; Goodell, J.W.; Goyal, A.; Kallinterakis, V.

Authors

R. Karaa

S. Slim

J.W. Goodell

A. Goyal



Abstract

We empirically examine whether feedback traders are active in the Bitcoin and the extent to which their presence is affected by a series of noise-related factors (sentiment; volume; liquidity) at three different frequencies (hourly; daily; weekly) for the April 2013–July 2019 period based on Bitstamp data. Our findings suggest that positive feedback trading grows stronger for higher (hourly; daily) frequencies, with its presence manifesting itself mainly during periods of high/improving sentiment and high/rising volume/liquidity. Additional tests reveal that the significance of hourly feedback trading is identified during hours corresponding to the trading hours of major European/North American markets. Overall, our results confirm extant literature evidence on the prevalence of noise trading in cryptocurrencies, while further showcasing that the factors motivating feedback trading in other asset classes (equities; ETFs; futures) exhibit similar effects over the presence of feedback traders in the cryptocurrency market.

Citation

Karaa, R., Slim, S., Goodell, J., Goyal, A., & Kallinterakis, V. (online). Do investors feedback trade in the Bitcoin—and why?. European Journal of Finance, 30(16), 1951-1971. https://doi.org/10.1080/1351847x.2021.1973054

Journal Article Type Article
Acceptance Date Aug 16, 2021
Online Publication Date Sep 15, 2021
Deposit Date Mar 31, 2023
Journal European Journal of Finance
Print ISSN 1351-847X
Electronic ISSN 1466-4364
Publisher Taylor and Francis Group
Peer Reviewed Peer Reviewed
Volume 30
Issue 16
Pages 1951-1971
DOI https://doi.org/10.1080/1351847x.2021.1973054
Public URL https://durham-repository.worktribe.com/output/1178007
Publisher URL https://www.tandfonline.com/doi/full/10.1080/1351847X.2021.1973054