The current study looked into the relationship between self-esteem and the use of cryptocurrencies and overconfidence bias. Three hundred thirty-seven investors from the northern portion of India total took part in the survey. AMOS 20.0 was used to create and test the conceptual framework. A questionnaire was used to extract data about the participants' investments in order to determine the level of their overconfidence bias and bitcoin participation. The outcomes confirmed the hypothesis. The results of the mediation study showed that there is direct and indirect influence of self-esteem on cryptocurrency investment behavior showing partial mediation effect.
Top1.0 Introduction
Financial investments have evolved substantially over the last several decades, from simple equities, fixed income, and mutual fund investments to more complicated financial derivatives such as futures, options, and futures contracts. (Ayedh et al., 2020). With the introduction of block-chain and cryptocurrencies, a new age in financial decisions has begun all across the world. The big price drop in early-2018, followed by a high in 2017, bolstered accusations that the cryptocurrency market is very volatile (Bohr & Bashir, 2014). Despite the severe volatility of cryptocurrencies, a rising number of individual investors see them as an investable asset class due to their large price rises and gains (Ji et al., 2019). Despite the high risk of losing money, Bitcoin has become a viable option for average investors. Cryptocurrencies have piqued people's curiosity, and many have begun to include them in their investment portfolios (Dyhrberg, 2016).
Previous cryptocurrency research has focused on attitudes, subjective norms, and perceived behavioural control, all of which have indicated how investors' intentions to utilise cryptocurrencies impact their decisions (Ashidiqi & Arundina, 2017; Warsame& Ireri, 2016). It cannot, however, be utilised by all users or in all situations. Despite bitcoin's quick ascent as a legitimate investment alternative, there is still a lot to learn about the elements that drive cryptocurrency investing.
Previous studies have suggested that investment decision making, risk taking and stock market participation of the investors are influenced by various psychological factors. The Big Five personality traits and the behavioural biases of Indian financial professionals when making investment decisions are compared in a study. All of the behavioural biases that were investigated have a statistically significant link with the neuroticism trait, but not with agreeableness or conscientiousness traits. The extraversion trait shows a significantly positive link with availability bias, whereas the openness trait is associated with a variety of emotional biases and cognitive heuristics (Baker et.al., 2022). It has been indicated in the prior literature that when cognitive capacities interacts with attitudes, it is possible to better understand financial decision-making behavioural intentions. (Aggarwal and Mazumder 2013; Ali et al. 2021; Hayat and Anwar 2016; Kaur and Arora 2021; Nadeem et al. 2020). Cognitive abilities play a significant role in problem analysis and solution. For instance, memory, a crucial component of the cognitive ability test, is connected to numeracy, the capacity to absorb information, the capacity to make conditional probability judgments, and the acquisition of financial knowledge (Spaniol & Bayen, 2005; Korniotis & Kumar, 2011). According to Christelis, Jappelli, and Padula (2010) and Grinblatt, Keloharju, and Linnainmaa (2011), other cognitive functioning, such as mathematical, verbal, recall, and logical skills, influences stock market involvement and portfolio decision-making. In addition, Bruine de Bruin, Parker, and Fischhoff (2012) noted a correlation between poorer performance on tasks requiring reasoning, pattern identification, and problem-solving as people age. So it makes sense to assume that cognitive abilities have a direct impact on older persons' financial conduct. Participating in the stock market necessitates a variety of mental qualities (Vaarmets et. al., 2019). The results of the research indicated that investors with poor cognition and emotions prefer fewer risks and holds less stocks in their portfolio as compared investors good in cognitions and emotions (Arora and Kumari, 2020; Vaarmets et. al., 2017). Because of representativeness and heuristics bias, it is more common to trade in high-quality companies' stocks than low-priced ones. Investors may also exhibit the gambler's fallacy while trading stocks of reputable companies while when trading lottery-type stocks they show overconfidence and self-attribution bias.