Beliefs in Cryptocurrency: Exploring the Relationship between Sentiment and Bitcoin
Beliefs in Cryptocurrency: Exploring the Relationship between Sentiment and Bitcoin

Author(s): Zuzana Rakovská
Subject(s): Business Economy / Management, Financial Markets, ICT Information and Communications Technologies
Published by: Masarykova univerzita nakladatelství
Keywords: Bitcoin; sentiment; Sentix; cryptocurrency; impulse-response;
Summary/Abstract: The rise of the Internet changed the way how financial markets work. Due to user generated content, quite everybody might contribute to the large set of information and the exchange of news happens faster than ever. An important variable in such new era is sentiment, which causes market participants to act on noisy signals from Internet as they were valid inputs. Importantly, sentiment is considered the crucial ingredient in price formation of now increasingly attractive digital currencies. Investors' beliefs affect exchange rates of those currencies considerably simply because of lack of fundamentals and regulation. In this paper we will examine the relationship between sentiment and price of the most popular cryptocurrency, Bitcoin. We will employ three measures of sentiment constructed by Sentix survey with aim to explore the effect of both institutional and individual investor's sentiment as well as overall sentiment of the community.

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