Behavioral Finance and Market Anomalies: Evidence from Cryptocurrency Trading

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Roop Raj, Sameer Yadav, Vikash Barnwal, Krunal J Damania, Bhola Khan, Manu Vasudevan Unni

Abstract

By examining how psychological biases and emotional variables impact financial decision-making, behavioural finance provides an engaging perspective through which to observe market anomalies in bitcoin trading. Cryptocurrency markets are more volatile, speculative, and deviate from the efficient market hypothesis (EMH) than regular markets. This study examines how investor behaviour and price dynamics in cryptocurrency markets are influenced by cognitive biases such herding, overconfidence, and loss aversion. Price bubbles, overreaction to news, and sharp price fluctuations are among the major market oddities identified by the research, which draws on theoretical frameworks and actual data. The ramifications of these anomalies for market stability, efficiency, and regulatory actions are further examined in the article. This study intends to advance knowledge of market dynamics in digital currencies by offering a thorough examination of behavioural influences in cryptocurrency trading. This will help investors, regulators, and policymakers navigate this changing financial environment.

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How to Cite
Roop Raj, Sameer Yadav, Vikash Barnwal, Krunal J Damania, Bhola Khan, Manu Vasudevan Unni. (2024). Behavioral Finance and Market Anomalies: Evidence from Cryptocurrency Trading. European Economic Letters (EEL), 14(4), 1120–1129. Retrieved from https://www.eelet.org.uk/index.php/journal/article/view/2241
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