Will the cryptocurrency exuberance last? An empirical assessment using AI and the ARDL approach

Cryptocurrency is the most innovative financial and technological breakthrough of this generation. Investment in cryptocurrency grew from USD 11.18 billion in December 2016 to USD 2.147 trillion in April 2024; however, the rationality of investor exuberance is uncertain. This paper explores stakeholders' perceptions of cryptocurrency using a machine-learning approach based on artificial intelligence (AI). In particular, we employ a lexicon-based emotion-detection sentiment analysis to investigate stakeholder perceptions, using 2.3 million open-source data points. We divide the findings into positive, neutral, and negative stakeholder perception pillars based on factors such as trustworthiness in cryptocurrency, motives, cryptocurrency awareness and knowledge, ownership, socioeconomic characteristics of users, and usage. Our analysis reveals that 51 percent of the stakeholders have a positive perception of cryptocurrency, whereas 40 percent have a neutral perception and 9 percent a negative perception. After identifying the perceptions, we investigate the relationship between cryptocurrency prices and stakeholder perceptions using the autoregressive distributed lag (ARDL) framework with time-series data from August 2017 to July 2023. The long- and short-term results confirm that positive and negative perceptions have statistically significant effects on cryptocurrency prices. Individual investors comprise the largest share of those with a positive perception, as 54 percent have a positive view of cryptocurrency. Institutional investors, however, have the largest share of those with a neutral perception because of the lack of a well-established regulatory framework for cryptocurrency. However, 39 percent of institutional investors hold a positive perception is growing, a sign of a growing trend, as they are among the major investor groups with an interest in investing in crypto. Other stakeholders, such as the government, academia, and other miscellaneous groups, have a negative perception. Our results demonstrate that cryptocurrency has affected social change, social inclusion, and sustainability. Moreover, our findings offer social insights about crypto stakeholders’ perceptions about the design of strategies to promote cryptocurrency and the establishment of a sustainable crypto ecosystem.