Herd behavior in terms of social psychology: The example of crypto asset markets

Abstract

The four main causes of sudden price fluctuations in crypto asset markets are speculative news within the scope of global developments, positive market perceptions that increase the price, rising stock market values, and herd behavioral tendencies on crypto assets. The purpose of this study is to examine herd behavior trends in terms of social psychology, exemplified by the crypto asset market. In this framework, firstly, the daily yield pricing of twenty-two crypto assets with the highest transaction volume was examined in the period of August 2013-December 2019, and then the trend of herd behavior of these assets on the market was investigated. Cross Sectional Absolute Deviation (CSAD) method was used to measure the herd behavior trend. The analysis revealed the presence of herd behavior trend in regime 1 and regime 3 models.