Impact of Behavioral Aspects on Crypto-Currency Investment Decisions in Baluchistan

Abstract

This study examines the influence of behavioral factors on crypto-currency investment decisions, focusing on five dimensions: investor sentiment, overconfidence, salience, overreaction, and herding behavior. A quantitative causal research design was employed, with primary data collected from 100 respondents through a structured questionnaire using a non-probability convenience sampling technique. Data were analyzed using SPSS, employing reliability analysis, descriptive statistics, correlation analysis, and regression analysis. The results indicate that behavioral factors collectively explain approximately 52.6% of the variation in crypto-currency investment decisions (R² = 0.526, F = 20.872, p < .001). Overconfidence emerged as the strongest positive predictor (β = 0.451, p < .001), followed by herding behavior (β = 0.275, p = .001) and investor sentiment (β = 0.272, p = .001). Salience exhibited a significant negative effect (β = -0.202, p = .011), while overreaction did not significantly influence investment decisions (β = -0.031, p = .709). The findings reveal that crypto-currency investment decisions are not driven solely by rational financial considerations but are substantially shaped by psychological biases and emotional factors. These results have important implications for investor education, financial literacy programs, and regulatory policy in the developing crypto-currency market.

Keywords: behavioral finance, crypto-currency, investment decisions, overconfidence, herding behavior