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Time horizon and cryptocurrency ownership: Is crypto not speculative?

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  • Bonaparte, Yosef

Abstract

This paper shows that households’ time horizon influences the propensity to own crypto. In particular, the longer the time horizon, the greater the propensity to own Crypto. Our results are robust even among educated and financially literate households, and using different data sets. We then present a fully rational expectation household life cycle model, and demonstrate that household’s time horizon should negatively influence the propensity to own crypto. We examine other explanations, such as, transaction cost (cost variation in learning crypto investment, cheaper for millennials) or the fear of missing out (FOMO) prospects, and find no significant change in the results. Altogether, the empirical and theoretical results suggest that households view Crypto as a pseudo productive/long-term asset class, and not speculative.

Suggested Citation

  • Bonaparte, Yosef, 2022. "Time horizon and cryptocurrency ownership: Is crypto not speculative?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:intfin:v:79:y:2022:i:c:s1042443122000877
    DOI: 10.1016/j.intfin.2022.101609
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    Cited by:

    1. Griffith, Todd & Clancey-Shang, Danjue, 2023. "Cryptocurrency regulation and market quality," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 84(C).
    2. Bonaparte, Yosef, 2024. "Do entrepreneurs use cryptocurrency to hedge against their business risk?," Finance Research Letters, Elsevier, vol. 62(PB).
    3. Bonaparte, Yosef, 2023. "Introducing the Cryptocurrency VIX: CVIX✰," Finance Research Letters, Elsevier, vol. 54(C).
    4. Juan Ignacio Ibañez & Alexander Freier, 2023. "Bitcoin’s Carbon Footprint Revisited: Proof of Work Mining for Renewable Energy Expansion," Challenges, MDPI, vol. 14(3), pages 1-21, August.
    5. Fabian Nemeczek & Daniel Weiss, 2023. "Insights on Crypto Investors from a German Personal Finance Management App," JRFM, MDPI, vol. 16(4), pages 1-38, April.
    6. Christian Zeiß & Myriam Schaschek & Lisa Straub & Christoph Tomitza & Axel Winkelmann, 2024. "Re-intermediation of the crypto asset ecosystem by banks: An empirical study on acceptance drivers among the populace," Electronic Markets, Springer;IIM University of St. Gallen, vol. 34(1), pages 1-24, December.

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    More about this item

    Keywords

    Crypto currency; Bitcoin; Speculative asset; Productive asset; Demographics; Saving motive; Sophisticated investor; Social investor;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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