Dissertation
Critical validation of behavioural finance, findings in the Bitcoin Market development
University of the Sunshine Coast, Queensland
Doctor of Philosophy, University of the Sunshine Coast, Queensland
2022
DOI:
https://doi.org/10.25907/00131
Abstract
Investors tend to sell their winning investments and hold onto their losers. This phenomenon, known as the disposition effect in the field of behavioural finance, is well known and has been shown to be prevalent in many existing markets. But what about new atypical markets like cryptocurrencies? Do investors act as irrationally as in traditional markets? One might suspect as much and hypothesise that cryptocurrency sells occur more frequently in positive market conditions and less frequently in negative market conditions. However, so far there has been no empirical evidence of this.
This thesis expands the existing research and empirically investigates the prevalence of the disposition effect in Bitcoin by testing this hypothesis. The impact of market sentiment on investors’ selling behaviour is also investigated. The research results show that investors are indeed subject to the disposition effect, tending to sell their winning positions too soon and holding on to losing positions for too long. This effect is quite evident from the boom and bust year 2017 onwards, as confirmed by most of the applied technical indicators. The empirical results also identify significant predictors for the investors’ selling behaviour, based on selected indicators out of technical market analysis for all four sentiment categories: market trend, momentum, volatility and volume.
This study shows that Bitcoin traders act just as irrationally as traders in other, more established markets, and that the identified technical indicators are able to provide some, if limited predictive power in forecasting the selling behaviour of cryptocurrency investors.
Details
- Title
- Critical validation of behavioural finance, findings in the Bitcoin Market development
- Authors
- Juergen Schatzmann - University of the Sunshine Coast, Queensland, School of Business and Creative Industries
- Contributors
- Sajid Anwar (Supervisor) - University of the Sunshine Coast, Queensland, Indigenous and Transcultural Research Centre - Legacy
- Awarding institution
- University of the Sunshine Coast, Queensland
- Degree awarded
- Doctor of Philosophy
- Publisher
- University of the Sunshine Coast, Queensland
- DOI
- 10.25907/00131
- Organisation Unit
- School of Business and Creative Industries; Indigenous and Transcultural Research Centre; University of the Sunshine Coast, Queensland
- Language
- English
- Record Identifier
- 99619708702621
- Output Type
- Dissertation
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