Investors Sentiments in Cryptocurrency

Ashraf Akhter; Valeed Ansari

doi:10.21844/mijia.20.2.2

Ashraf Akhter Doctoral Fellow, Faculty of Management Studies & Research, Aligarh Muslim University (AMU), Aligarh, India
Valeed Ansari Senior Professor, Faculty of Management Studies & Research, Aligarh Muslim University (AMU), Aligarh, India

DOI: https://doi.org/10.21844/mijia.20.2.2

Keywords: cryptocurrency, Bitcoin, Ethereum, volatility, risk management, market stress, hedge potential

Abstract

The cryptocurrency market, characterized by its extreme volatility and speculative nature, poses significant risk and reward opportunities
for investors. This paper explores the dynamics of risk and volatility within cryptocurrency markets, with a focus on Bitcoin, Ethereum,
and other leading digital assets. Drawing exclusively on data from widely recognized online financial sources, this study examines the
interplay between cryptocurrency volatility and traditional asset behaviour under market stress conditions. Key crisis events—including
the 2016 Brexit referendum, the 2017 market correction, and the 2020 COVID-19 crash—serve as case studies to highlight how
cryptocurrencies diverge in risk profiles from conventional assets like Gold and the S&P 500. Additionally, correlations between
Bitcoin, Gold, and US Treasury Bonds illustrate the nuanced hedge potential of cryptocurrencies in both short- and long-term investment
horizons. This analysis underscores the importance of understanding cryptocurrency behaviour as it matures, while providing insights
into the broader financial implications of incorporating these assets into traditional portfolios amidst economic uncertainties.