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Does Herding Behaviour Among Traders Increase During Covid 19 Pandemic? Evidence from the Cryptocurrency Market

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Re-imagining Diffusion and Adoption of Information Technology and Systems: A Continuing Conversation (TDIT 2020)

Part of the book series: IFIP Advances in Information and Communication Technology ((IFIPAICT,volume 617))

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Abstract

Cryptocurrencies are digital currencies and trading these currencies have gained huge momentum in recent years. The sophisticated features, complexities on regulatory framework, and high volatility of Cryptocurrencies would pose trading challenges to new investors and/or investors with limited knowledge. Investors generally are influenced by fund managers, financial analysts or other investors who are considered as well informed and highly knowledgeable peers. Investors mimic their behaviour to perform trading activities and such behaviour is termed as Herding. Covid 19 pandemic triggered severe uncertainties in the cryptocurrencies market and has led to wide fluctuations in prices causing severe volatility and market crashes. This paper aims to examine the herding behaviour in cryptocurrency market during the pre Covid 19 and Covid 19 pandemic period using the Cross-Sectional Standard Deviation (CSSD) approach. The findings of the paper reveal that herding was evident among all the ten crypto-currencies in normal market conditions of the entire sample period but not during market upswing or downswing. However, the herding behaviour was present in the cryptocurrencies Litecoin, Cardano and Dash during the Covid 19 pandemic period in all market conditions.

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Authors and Affiliations

  1. KCT Business School, Kumaraguru College of Technology, Coimbatore, 641049, India

    D. Susana, J. K. Kavisanmathi & S. Sreejith

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  1. D. Susana
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  2. J. K. Kavisanmathi
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  3. S. Sreejith
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Correspondence to D. Susana .

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Editors and Affiliations

  1. Indian Institute of Management Tiruchira, Tiruchirappalli, India

    Sujeet K. Sharma

  2. Swansea University, Swansea, UK

    Yogesh K. Dwivedi

  3. Indian Institute of Management Nagpur, Nagpur, India

    Bhimaraya Metri

  4. University of Bradford, Bradford, UK

    Nripendra P. Rana

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Susana, D., Kavisanmathi, J.K., Sreejith, S. (2020). Does Herding Behaviour Among Traders Increase During Covid 19 Pandemic? Evidence from the Cryptocurrency Market. In: Sharma, S.K., Dwivedi, Y.K., Metri, B., Rana, N.P. (eds) Re-imagining Diffusion and Adoption of Information Technology and Systems: A Continuing Conversation. TDIT 2020. IFIP Advances in Information and Communication Technology, vol 617. Springer, Cham. https://doi.org/10.1007/978-3-030-64849-7_17

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  • DOI: https://doi.org/10.1007/978-3-030-64849-7_17

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