IDEAS home Printed from https://ideas.repec.org/a/ebj/ijpssr/2025v4iia8.html
   My bibliography  Save this article

Investor Sentiments and Bitcoin Volatility: Empirical Evidence from Cryptocurrency Market

Author

Listed:
  • Mubashir Zaman
  • Dr. Surayya Jamal
  • Humma Abid
  • Farhan Ahmad

Abstract

The present study goals to examine the impact of investors’ sentiment, such as overconfidence, optimism, pessimism, and reasonable investor expectations, on Bitcoin currency. Therefore, daily Bitcoin trading data was taken from CoinMarketCap. The data period consists of January 2023 to December 2024. The unit root stationary, GARCH (1,1) model and ordinary least square (OLS) regression test were used. The unit root stationary (ADF) test results reveal that all variables are stationary at level. The GARCH (1,1) model suggests that the lagged trading volume has a considerable positive influence on the current Bitcoin trade volume. Further GARCH (1,1) results demonstrate that optimism has a positive significant impact on and pessimism has a negative significant influence on Bitcoin exchange volume. Whereas ordinary least square regression (OLS) models also show that optimism has a positive significant impact and pessimism has a negative impact on Bitcoin trade volume. The study has various suggestions for stakeholders, investors, policymakers, and researchers.

Suggested Citation

  • Mubashir Zaman & Dr. Surayya Jamal & Humma Abid & Farhan Ahmad, 2025. "Investor Sentiments and Bitcoin Volatility: Empirical Evidence from Cryptocurrency Market," International Journal of Politics & Social Sciences Review (IJPSSR), International Journal of Politics & Social Sciences Review (IJPSSR), vol. 4(I), pages 97-103.
    • Handle: RePEc:ebj:ijpssr:2025v4iia8
    as

    Download full text from publisher

    File URL: https://ojs.ijpssr.org.pk/index.php/ijpssr/article/download/106/87/1470
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gervais, Simon & Odean, Terrance, 2001. "Learning to be Overconfident," The Review of Financial Studies, Society for Financial Studies, vol. 14(1), pages 1-27.
    2. Naveeda K. Katper & Muhammad Azam & Nazima Abdul Karim & Syeda Zinnaira Zia, 2019. "Behavioral biases and investors’ decision-making: The moderating role of socio-demographic variables," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 6(03), pages 1-15, September.
    3. Dirk G. Baur & Thomas Dimpfl, 2021. "The volatility of Bitcoin and its role as a medium of exchange and a store of value," Empirical Economics, Springer, vol. 61(5), pages 2663-2683, November.
    4. Vytautas Karalevicius & Niels Degrande & Jochen De Weerdt, 2018. "Using sentiment analysis to predict interday Bitcoin price movements," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 19(1), pages 56-75, December.
    5. Gulnur Muradoglu & Nigel Harvey, 2012. "Behavioural finance: the role of psychological factors in financial decisions," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 4(2), pages 68-80, November.
    6. Gulnur Muradoglu & Nigel Harvey, 2012. "Behavioural finance: the role of psychological factors in financial decisions," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 4(2), pages 68-80, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hanvedes Daovisan & Thanapauge Chamaratana, 2020. "Resistance to change in the financial management of small family-owned firms: a grounded theory of family firms in Laos," Journal of Accounting & Organizational Change, Emerald Group Publishing Limited, vol. 16(3), pages 497-514, August.
    2. Stephen A. Hillegeist & James P. Kavourakis & Matthew Pinnuck, 2023. "The association between quarter length, forecast errors, and firms’ voluntary disclosures," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 1885-1918, June.
    3. ?ikolaos A. Kyriazis, 2021. "Impacts of Stock Indices, Oil, and Twitter Sentiment on Major Cryptocurrencies during the COVID-19 First Wave," Bulletin of Applied Economics, Risk Market Journals, vol. 8(2), pages 133-146.
    4. Bellonia Antonella & Passaretti Tommaso & Visconti Raffaele, 2013. "Seasonality in Equity Rising on Stock Markets. Windows of Opportunity? Empirical Evidence from China, India, Brazil and South Africa," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(4), pages 1-1, August.
    5. Sapkota, Niranjan, 2022. "News-based sentiment and bitcoin volatility," International Review of Financial Analysis, Elsevier, vol. 82(C).
    6. Kenneth Yung & Yen-Chih Liu, 2009. "Implications of futures trading volume: Hedgers versus speculators," Journal of Asset Management, Palgrave Macmillan, vol. 10(5), pages 318-337, December.
    7. Sheng‐Tun Li & Kuei‐Chen Chiu & Chien‐Chang Wu, 2023. "Apply big data analytics for forecasting the prices of precious metals futures to construct a hedging strategy for industrial material procurement," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 942-959, March.
    8. Berger, Allen N. & Kick, Thomas & Schaeck, Klaus, 2014. "Executive board composition and bank risk taking," Journal of Corporate Finance, Elsevier, vol. 28(C), pages 48-65.
    9. Yosef Bonaparte & Russell Cooper & Mengli Sha, 2019. "Rationalizing Trading Frequency and Returns: Maybe Trading is Good for You," NBER Working Papers 25838, National Bureau of Economic Research, Inc.
    10. Zheng, Xiaotian & Zhou, Youcheng & Iqbal, Sajid, 2022. "Working capital management of SMEs in COVID-19: role of managerial personality traits and overconfidence behavior," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 439-451.
    11. Drobetz, Wolfgang & Kugler, Peter & Wanzenried, Gabrielle & Zimmermann, Heinz, 2009. "Heterogeneity in asset allocation decisions: Empirical evidence from Switzerland," International Review of Financial Analysis, Elsevier, vol. 18(1-2), pages 84-93, March.
    12. Lisa Beck-Werz, 2022. "Young, Male, Experienced: What factors drive overconfidence? Empirical evidence from marathon running," Working Papers Dissertations 96, Paderborn University, Faculty of Business Administration and Economics.
    13. Kajtazi, Anton & Moro, Andrea, 2019. "The role of bitcoin in well diversified portfolios: A comparative global study," International Review of Financial Analysis, Elsevier, vol. 61(C), pages 143-157.
    14. Laura Hueber & Rene Schwaiger, 2021. "Debiasing Through Experience Sampling: The Case of Myopic Loss Aversion," Working Papers 2021-01, Faculty of Economics and Statistics, Universität Innsbruck.
    15. Guo, Xu & McAleer, Michael & Wong, Wing-Keung & Zhu, Lixing, 2017. "A Bayesian approach to excess volatility, short-term underreaction and long-term overreaction during financial crises," The North American Journal of Economics and Finance, Elsevier, vol. 42(C), pages 346-358.
    16. Chung, San-Lin & Hung, Chi-Hsiou & Yeh, Chung-Ying, 2012. "When does investor sentiment predict stock returns?," Journal of Empirical Finance, Elsevier, vol. 19(2), pages 217-240.
    17. Vasile Brătian & Ana-Maria Acu & Camelia Oprean-Stan & Emil Dinga & Gabriela-Mariana Ionescu, 2021. "Efficient or Fractal Market Hypothesis? A Stock Indexes Modelling Using Geometric Brownian Motion and Geometric Fractional Brownian Motion," Mathematics, MDPI, vol. 9(22), pages 1-20, November.
    18. Pantisa Pavabutr & Bin Zhao, 2024. "Do retail investors gamble more during lockdown?," International Review of Finance, International Review of Finance Ltd., vol. 24(4), pages 572-603, December.
    19. Oberlechner, Thomas & Osler, Carol, 2012. "Survival of Overconfidence in Currency Markets," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 47(1), pages 91-113, February.
    20. Francisco Gomes & Michael Haliassos & Tarun Ramadorai, 2021. "Household Finance," Journal of Economic Literature, American Economic Association, vol. 59(3), pages 919-1000, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebj:ijpssr:2025v4iia8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hazrat Bilal (email available below). General contact details of provider: http://www.ijpssr.org.pk .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.