@article{9cf6766c92ab4728b760995ac773c4fa,
title = "Too much is too bad: The effect of media coverage on the price volatility of cryptocurrencies",
abstract = "This study investigates the influence of information excess due to the increased media coverage on the price volatility of cryptocurrencies. News coverages may serve as either signals or noise in cryptocurrency markets characterized by an insufficient understanding of the fundamental value of assets and a high level of strategic complementarity. In a game-theoretic model, we show that the number of news coverages, either related or unrelated to the fundamentals, increases the price volatility of assets in a nascent financial market. We tested our hypotheses using a unique dataset of 358,118 observations of 500 cryptocurrencies and 36,572 media coverages between 2014 and 2017, the early period of cryptocurrency with the rise of public attention. The results show that cryptocurrency price volatility increases in the number of unrelated news for both major and minor coins. The volatility even increases with the number of related news in minor coins. These results have important implications for investors and entrepreneurs about the effect of misinformation in nascent markets.",
keywords = "Cryptocurrency, Media coverage, Nascent market, Price volatility, Strategic complementarity",
author = "Kangsan Lee and Daeyoung Jeong",
note = "Funding Information: For their helpful comments, we thank Sangyeup Choi, Hwan Koo Kang, Byoung-Ki Kim, Duk Gyoo Kim, Yongjun Kim, Ohik Kwon, Jieun Lee, Seunghyeon Lee, Suk won Lee, Minsu Park, Yoon Jae Ro, and participants at the Writing Group at NYUAD Social Research and Public Policy, the 2021 Korea{\textquoteright}s Allied Economic Associations Annual Meeting, the Economics Seminar at KAIST, the Microeconomic Research Forum at Bank of Korea Economic Research Institute. This work was supported by the research fund of New York University Abu Dhabi, United Arab Emirates ( 76 71240 ADHPG AD244 ) and the research fund of Hanyang University, South Korea ( HY-202100000003029 ). Funding Information: For their helpful comments, we thank Sangyeup Choi, Hwan Koo Kang, Byoung-Ki Kim, Duk Gyoo Kim, Yongjun Kim, Ohik Kwon, Jieun Lee, Seunghyeon Lee, Suk won Lee, Minsu Park, Yoon Jae Ro, and participants at the Writing Group at NYUAD Social Research and Public Policy, the 2021 Korea's Allied Economic Associations Annual Meeting, the Economics Seminar at KAIST, the Microeconomic Research Forum at Bank of Korea Economic Research Institute. This work was supported by the research fund of New York University Abu Dhabi, United Arab Emirates (76 71240 ADHPG AD244) and the research fund of Hanyang University, South Korea (HY-202100000003029). Publisher Copyright: {\textcopyright} 2023 Elsevier Ltd",
year = "2023",
month = may,
doi = "10.1016/j.jimonfin.2023.102823",
language = "English (US)",
volume = "133",
journal = "Journal of International Money and Finance",
issn = "0261-5606",
publisher = "Elsevier BV",
}