Cryptocurrencies from a behavioural finance perspective

Abstract

In today’s world, cryptocurrencies are no longer a technological miracle for a small group of programmers. They have become a very common investment instrument that attracts the attention of both traditional investors (funds and traders) and those who are not interested in classical markets and investing in general. This is especially true for bitcoin. The purpose of the study was to investigate the influence of behavioural psychology in making investment decisions in cryptocurrency markets. The research methods included analysing historical data on cryptocurrency prices, as well as observing investors’ reactions to important events and news related to cryptocurrencies. In addition, behavioural analysis methods were used to understand and predict investors’ reactions to various incentives and situations in the cryptocurrency markets. The results of the article describe the main provisions of behavioural finance, which are necessary for an overview of the cryptocurrency market. The impact of the main topics of behavioural finance research is also considered. It should be noted that in the absence of a large amount of data, the study of the cryptocurrency market and the behaviour of participants is mainly a hypothetical assessment, and the empirical aspects of the study are copied from the behavioural finance of the classical market. Considering the cryptocurrency market from the point of view of behavioural finance, the main points of view of different parties were considered: both supporters of cryptocurrency and those who consider this phenomenon to be an economic bubble in a technological wrapper. The information reflecting the main biases of behavioural finance, which relate to both classical markets and cryptocurrency markets, is systematised. The study of cryptocurrencies from the point of view of behavioural finance reflects the practical value in understanding the impact of behavioural factors on price dynamics and investment decisions in cryptocurrency markets