Finance Webinar（2020-26)

Topic: Distrust and Cryptocurrency

Speaker: Yang You, Harvard University

Time: Monday, 28 December,10:00-11:30 AM Beijing Time

Location: Microsoft Teams Online Conference Room

Abstract:

This paper uses violations of the law of one price of Bitcoin to uncover sources of demand for cryptocurrency. In line with Hayek, we show that distrust breeds demand. We proxy Bitcoin demand with transitory price deviations--Bitcoin prices in a local currency, converted into dollars, relative to the average worldwide dollar Bitcoin prices. A simple portfolio choice model elucidates several predictions we find in the data. Price deviations rise when 1) perceptions of institutional failures grow, 2) crypto-trading frictions increase, and 3) cryptocurrency prices rally. These price responses are stronger in countries where people express more distrust in others.

Introduction:

Yang You, BA Tsinghua School of Economics and Management, Harvard Ph.D. Candidate in Economics. His research areas include Fintech, financial economics, and Culture and Institutions. His recent papers have been published in Journal of Financial Economics (awarded Fama-DFA Best Paper), forthcoming in NBER Macro Annual, and R&R at Review of Economic Studies.

//yangyou1.weebly.com/

Your participation is warmly welcomed!