Bitcoin, speculative sentiments and crypto-assets valuation

Tut, DANIEL (2024): Bitcoin, speculative sentiments and crypto-assets valuation.

Abstract

What factors drive the valuation of Bitcoin and other crypto-assets? We use a novel measure and show that [1] Sentiments in Bitcoin drive the price action and have a material effect on returns [2] Sentiments in Bitcoin drive the valuation of other cryptocurrency assets [3] Sentiments in Bitcoin drive returns in other cryptocurrency assets. Our results show that optimistic sentiments in Bitcoin drive overvaluation in Bitcoin itself and other cryptocurrency assets. Our results support the notion that liquidity measures are salient factors in price discovery.

• Item Type: MPRA Paper
• Language: English
• Keywords: Valuation, Cryptocurrencies, Bitcoin, Digital Assets, sentiments, speculation
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D84 - Expectations ; Speculations; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G2 - Financial Institutions and Services > G24 - Investment Banking ; Venture Capital ; Brokerage ; Ratings and Ratings Agencies; G - Financial Economics > G3 - Corporate Finance and Governance; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill; G - Financial Economics > G3 - Corporate Finance and Governance > G39 - Other

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