Analytics at Wharton

Research Spotlight

Do Our Attitudes Towards
Cryptocurrencies Affect Pricing?

In Analytics at Wharton’s Research Spotlight series, we highlight research by Wharton and Penn faculty, doctoral students, and researchers whose work focuses on innovations and applications of data science, analytics, and artificial intelligence.

This month, we spoke with David Reibstein, Catherine “Cait” Lamberton, Z. John Zhang, and, Martin P. Fritze about their research into the attitudes of consumers towards cryptocurrencies – whose true value is famously difficult to ascertain – and how those attitudes are reflected in the pricing of cryptocurrencies.

Meet the Research Team

David Reibstein

David Reibstein is the William Steward Woodside Professor of Marketing at the Wharton School – his research focuses on branding, nation branding, marketing metrics, product line decisions, and more.

Cait Lamberton

Catherine “Cait” Lamberton is the Alberto I. Duran President’s Distinguished Professor of Marketing and the Co-Editor for the Journal of Marketing at the Wharton School. Her research addresses a wide range of consumption-related phenomena, including retail environments, responses to taxation, emotions, and the role of dignity and respect in marketplace experiences.

Z. John Zhang

Z. John Zhang is the Tsai Wan-Tsai Professor of Marketing and Director of the Penn Wharton China Center. His research interests include channel and retail management, competitive strategies, market entry, and more. In his own words, he is “an expert on pricing and an amateur for everything else.”

Martin P. Fritze

Martin P. Fritze is a Visiting Scholar at Wharton and an expert on consumer behavior and digital transformations. His work applies philosophy to explore the meaning of materiality in a digitized world.

What challenge is your work addressing?

Interest in cryptocurrencies such as Bitcoin and Ethereum persists despite strong fluctuations in crypto markets and ongoing questions on how cryptocurrencies maintain non-zero prices without any intrinsic value, such as gold or other precious metals, and the lack of formal backing from governments.

Our group is responding to the pressing need for empirical data to shed light on factors that influence cryptocurrency prices based on consumer insights. We seek to understand whether consumer confidence in cryptocurrency is a leading indicator of subsequent crypto pricing. We are tracking this across various sub-groups of consumers to determine if there are certain types of consumers that better inform future prices.

What methods have you used to address this issue?

We are conducting monthly surveys to gather primary data. These surveys inquire about a consumer’s confidence in cryptocurrencies, their ownership and usage of cryptocurrencies, trust in crypto markets versus institutions like the SEC or FED, and questions related to their personality and general consumption behavior.

What is the result of your work thus far? 

We have developed a consumer sentiment index – the Consumer Cryptocurrency Confidence Index (c3i) – and collect data every month. Besides many additional insights into how consumers respond to cryptocurrencies, such as, for example, men generally expressing more confidence in cryptocurrencies than women, we observe strong correlations of our index with the prices of major currencies like Ethereum and Bitcoin. We are testing the predictive validity of our index for crypto prices.

While it may seem that cryptocurrencies should reflect objective, financial preferences, what we find in our data is that they can also have profound meanings to people – they relate to their ideology, the way they think about trust, and what they demand in return for their own time and work. Thus, they may offer some consumers a way to affirm their own dignity. That is, they affirm their agency in the marketplace, give them more power over what’s happening, and allow a way of expressing their beliefs about the world.

What would help improve your solution?

An expanded budget for follow-up studies, larger samples, and cross-national data sets could help us paint a more comprehensive picture of consumer confidence.

Where can we go to learn more/keep up with your work?

Our main output will be through academic publications, some of which are forthcoming. We have also developed a website where viewers can download a free report for an overview of our project.