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Trading Cryptocurrencies as a Pandemic Pastime: COVID-19 Lockdowns and Bitcoin Volume

Author

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  • Alexander Guzmán

    (CESA School of Business, Bogotá 110311, Colombia)

  • Christian Pinto-Gutiérrez

    (Faculty of Business and Economics, Universidad de Talca, Talca 3460000, Chile)

  • María-Andrea Trujillo

    (CESA School of Business, Bogotá 110311, Colombia)

Abstract

This paper examines the impact of COVID-19 lockdowns on Bitcoin trading volume. Using data from Apple mobility trends and several time-series econometric models, we find that investors became active participants during the COVID-19 pandemic period and traded more bitcoins on days with low mobility associated with lockdown mandates. These results remain robust after controlling for stocks and gold returns, the VIX index, and the level of attention and sentiment toward Bitcoin, as measured by Google search frequencies and the tone of Tweets discussing Bitcoin. These results suggest that when individual investors have ample free time on their hands, they trade cryptocurrencies as a pastime and use the Bitcoin market as a form of entertainment. Moreover, our results have important implications concerning investors’ herding behavior and overconfidence leading to noise trader risks and bubbles typically accompanied by high trading volume in cryptocurrency markets.

Suggested Citation

  • Alexander Guzmán & Christian Pinto-Gutiérrez & María-Andrea Trujillo, 2021. "Trading Cryptocurrencies as a Pandemic Pastime: COVID-19 Lockdowns and Bitcoin Volume," Mathematics, MDPI, vol. 9(15), pages 1-15, July.
    • Handle: RePEc:gam:jmathe:v:9:y:2021:i:15:p:1771-:d:602136
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    5. Maouchi, Youcef & Charfeddine, Lanouar & El Montasser, Ghassen, 2022. "Understanding digital bubbles amidst the COVID-19 pandemic: Evidence from DeFi and NFTs," Finance Research Letters, Elsevier, vol. 47(PA).

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