Are cryptocurrency traders pioneers or just risk-seekers? Evidence from brokerage accounts

Matthias Pelster, Bastian Breitmayer, Tim Hasso

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Abstract

Are cryptocurrency traders driven by a desire to invest in a new asset class to diversify their portfolio or are they merely seeking to increase their levels of risk? To answer this question, we use individual-level brokerage data and study their behavior in stock trading around the time they engage in their first cryptocurrency trade. We find that when engaging in cryptocurrency trading investors simultaneously increase their risk-seeking behavior in stock trading as they increase their trading intensity and use of leverage. The increase in risk-seeking in stocks is particularly pronounced when volatility in cryptocurrency returns is low, suggesting that their overall behavior is driven by excitement-seeking.
Original languageEnglish
Pages (from-to)98-100
Number of pages3
JournalEconomics Letters
Volume182
Early online date18 Jul 2019
DOIs
Publication statusPublished - Sep 2019

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