Research Work
Is Cryptocurrency a Bubble?
with special emphasis on India
As I have an immense interest in finance, behavioral economics, and human psychology in decision-making. This paper was prepared by me as a part of my coursework for the LS190 - Introduction to College Level Research course at Allegheny College during summer 2021.
About the Professor: Prof. Michael Michaelides is a Professor of Business and Economics at Allegheny College. He is B.A., University of Essex, 2011; M.S., London School of Economics, 2012; M.A., Ph.D., Virginia Tech, 2017. His core subjects are financial econometrics, empirical asset pricing, volatility modeling, and finance.
Summary
2020 and 2021 have been unusual years, not only for medical sciences but also for the world economy. A financial instrument that gained considerable momentum recently is cryptocurrency. This research paper analyses the mass hysteria developed among the Indian population, especially during March and April of 2021. As we take lessons from the previous financial crisis, like the 2008 Housing Bubble and the 1637 Tulip Bubble, the cryptocurrency bubble seems like a plausible event. Poignant factors contributing to this bubble speculation are misinformation, asymmetric information, herding behavior, and the disposition effect. The Kindleberger-Minsky model has been the basis for observing this behavior. This model talks about the typical pattern in financial bubble formation, and the paper explains how relevant it is today in the Indian cryptocurrency market. Primary data from the Indian population has been collected to show the existence of asymmetric and misinformation. The final part of the research paper talks about the regulation of cryptocurrency. Several recommendations have been presented to curb this potential financial threat to the economy.
Won the First Position in Research work of Economics by Scholarly and got featured in Times of India Newspaper Media article
