Cryptocurrency Market: Overreaction to News and Herd Instincts
Cryptocurrency Market: Overreaction to News and Herd Instincts

Author(s): Rui Dias, Mariana Chambino, Cristina Morais da Palma
Subject(s): Social Sciences, Supranational / Global Economy, Financial Markets
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Cryptocurrency; Overreaction; Mean reversion
Summary/Abstract: The present research focuses on the phenomenon of cryptocurrency market overreactions, especially examining the behavior of Bitcoin, DASH, EOS, Ethereum, Lisk, Litecoin, Monero, NEO, Quantum, Ripple, Stellar, and Zcash from January 2, 2018, to March 1, 2023. The findings show that there are both positive and negative autocorrelations, which might result in lowered volatility and more moderate fluctuations in prices. These results possess the potential to assist investors in making well-informed choices since they are less susceptible to being influenced by exaggerated reactions to news or information hitting the market. However, before investing in cryptocurrency markets, investors should exercise caution and carefully examine their risk tolerance, since market circumstances may change quickly, making it impossible to perform consistently profitable trades.

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