Technical talk in bitcoin and equity
Year: 2025
Type: article
Abstract: Compared to equity markets, the cryptocurrency market is characterised by high volatility that is commonly without explanation stemming from new information. In this paper, we hypothesise that absent information, investors increase their use of technical trading language to rationalise cryptocurrency price movements. We develop a vocabulary of words designed to capture technical trading language (technical talk) used on large cryptocurrency subreddits on Reddit.com. We find a non-linear relationship between technical talk and bitcoin returns, with technical talk being prominent when bitcoin is performing poorly, and to a lesser extent when it is performing well. The asymmetry in technical talk suggests investors’ propensity to search for explanations when assets are performing poorly. We test this hypothesis using quantile regressions, and find technical talk is significantly higher in lower quantiles of bitcoin return. Our results point toward the use of technical talk when information is scarce.
Source: The British Accounting Review
Institution: The University of Western Australia
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,770
OpenAlex ID: W4416410343