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Exploring the Psychological Drivers of Cryptocurrency Investment Biases: Evidence from Indian Retail Investors

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  • Manabhanjan Sahu

    (SVKM’s Narsee Monjee Institute of Management Studies (NMIMS), Deemed to be University, Hyderabad 509301, India)

  • Furquan Uddin

    (Department of Management and Business Administration, Aliah University, Kolkata 700160, India)

  • Md Billal Hossain

    (WIUT Business School, Westminster International University in Tashkent (WIUT), Tashkent 100047, Uzbekistan)

Abstract

Cryptocurrency investment in India has quickly become a mainstream financial activity, but it is still highly prone to psychological factors that impact the decision-making of retail investors. This study examines the effect of personality traits on cryptocurrency investment behavior using the mediating variable of behavioral biases. Based on the Big Five Personality Model and the theory of Behavioral Finance, data were gathered from 716 Indian retail investors using a structured questionnaire. Partial Least Squares Structural Equation Modeling (PLS-SEM) was conducted to analyze the relationships among the variables. Results show that Openness to experience and Agreeableness significantly predict Availability Bias, whereas Extraversion and Agreeableness affect the Disposition Effect. The theoretical framework shows how bias-driven investment behavior in volatile markets such as cryptocurrency is triggered by personality-based predispositions. The study adds to the behavioral finance literature by taking psychological profiling outside the realms of traditional investment contexts into digital asset investing and provides practical insights for regulators, fintech platforms, and investment advisors to design interventions to mitigate bias and enhance investor education.

Suggested Citation

  • Manabhanjan Sahu & Furquan Uddin & Md Billal Hossain, 2025. "Exploring the Psychological Drivers of Cryptocurrency Investment Biases: Evidence from Indian Retail Investors," IJFS, MDPI, vol. 13(4), pages 1-27, November.
    • Handle: RePEc:gam:jijfss:v:13:y:2025:i:4:p:219-:d:1797245
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