Hong Kong study finds crypto herd behavior eased after 2023 trading rules

A follow-up study classified local crypto investors into four behavior types, with “follow-and-hold” investors the largest group, while FOMO and disposition effects remained elevated.

Summary

A Hong Kong follow-up study found virtual-asset investors showed less herd-driven behavior after the 2023 virtual-asset trading platform regulatory regime took effect, even as FOMO and disposition effects remained elevated. The Investor and Financial Education Council said blind-following behavior fell to 3.19 from 3.63, while imitation and momentum trading also declined. Research conducted by Hong Kong Polytechnic University classified local crypto investors into four behavior types, with the “follow-and-hold” group the largest at 33.9% and carrying the highest female ratio at 43%. The findings suggest tighter oversight may be coinciding with more restrained trading patterns in Hong Kong’s crypto market, though some emotionally driven biases remain persistent.

Terms & Concepts
  • virtual-asset trading platform regulatory regime: Hong Kong rules governing crypto trading platforms
  • momentum trading: Buying assets as prices keep rising
  • disposition effects: A tendency for investors to sell winning assets too early and keep losing positions too long