Unravelling the Complexities of Cryptocurrency Investment Decisions: A Behavioral Finance Perspective from Gulf Investors

Abstract

Purpose: This study aims to examine the impact of behavioral finance factors on the investment decisions of Gulf investors in the cryptocurrency market.
 
 Theoretical Framework: The study is based on the behavioral finance theory, which highlights the role of emotions and cognitive biases in shaping investment decisions. It examines the investment behavior and decision-making of Gulf investors in the cryptocurrency market using a comprehensive set of factors, including herding, heuristics, prospect, market, familiarity bias, and self-attribution bias.
 
 Design/Methodology/Approach: Primary data is collected through a survey-based approach using a 23-question distributed at the country level covering the United Arab Emirates, Kuwait, Qatar, and Saudi Arabia. The study analyzes the data collected using statistical methods to study the impact of behavioral finance factors on the investment decisions.
 
 Findings: The results show that herding and heuristics strongly influence investment decisions in the cryptocurrency market among Gulf investors. The prospect factor positively affects investment decision-making in KSA and Qatar but not in UAE and Kuwait. The market factor is a significant determinant of investment behavior, and investors in UAE and Qatar are more cautious and risk-averse compared to KSA and Kuwait. The familiarity bias factor has different effects on investment decision making in KSA and UAE.
 
 Research, Practical & Social Implications: This study offers valuable insights into how behavioral finance factors impact investment decisions in the cryptocurrency market. These findings can be useful to investors and financial institutions in developing investment strategies that take into account the cognitive and emotional biases of investors.
 
 Originality/Value: The study uses a comprehensive set of behavioral finance factors and includes respondents from four Gulf countries. Therefore, the study contributes to the existing literature by providing unique insights into the investment behavior and decision-making of Gulf investors in the cryptocurrency market.