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Title: Investors' beliefs and cryptocurrency prices Authors:  Matteo Benetton - Berkeley Haas (United States) [presenting]
Giovanni Compiani - Chicago Booth (United States)
Abstract: The aim is to explore the impact of investors' beliefs on cryptocurrency demand and prices using three individual-level surveys and a structural characteristics-based demand model with differentiated cryptocurrencies and heterogeneous investors. We show that younger individuals with lower income are more optimistic about the future value of cryptocurrencies, as are late investors. We identify the model combining observable beliefs with an instrumental variable strategy that exploits variation in the production of different cryptocurrencies. Counterfactual analyses quantify the impact on equilibrium prices and portfolio allocations of (i) entry of late optimistic investors, and (ii) growing concerns about the sustainability of energy-intensive proof-of-work cryptocurrencies.