Behavioral biases of investors in the cryptocurrency market

What is it about?

The last two decades have witnessed a significant shift in investor perspective from traditional finance to behavioral finance, which underlines the burgeoning interplay of cognition and emotions in financial decision-making. Irrationality among investors is unavoidable as behavioral biases play a vital role in determining investors' investing decisions in various markets. The psychological elements examined in this study are divided into two categories: heuristics and herding. Therefore, the study's goal is to look at the impact of these biases on cryptocurrency investors' investing decisions with risk tolerance as a mediator.

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Why is it important?

The study found a significant impact of heuristics bias in investing. The findings also highlight the importance of behavioral variables in investor decision-making. The association between behavioral biases and financial decisions is significantly influenced by risk tolerance. The verdict's consequence is that hit-and-run investors will be better equipped to stay in the cryptocurrency market and improve their skills in the most efficient way to make smart investment decisions. Likewise, the outcomes of this research will inspire financial experts to recognize that standard finance theory knowledge is insufficient to succeed in the cryptocurrency market.