✍️ [Analysis] Herding behavior and contagion in the cryptocurrency market - Gama Silva, Klotzle, Pinto, Gomes

In this empirical study, herding behavior and market contagion were analyzed for 50 coins from March 2015 - Nov. 2018 using common economic models. The researchers, among other goals, chiefly focused on portfolio management and used the CRIX coin index as an empirical basis for the study. The researchers concluded that herding behavior does exist in crypto markets and has the greatest pull when negative information is driving the group movements. Bitcoin ($BTC), it is found, drives and directs investment flows in crypto assets. So, news related to Bitcoin controls the herd with negative Bitcoin press moving the market the most. Analysis also shows that when Bitcoin falters, it typically causes contagion in every coin. Over the years analyzed, only one model saw coins with no significant contagion from Bitcoin movements: stablecoins Tether ($USDT) in 2015 and $BITUSD in 2016.

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