The metaverse hype: identifying bubbles and comovements of metaverse tokens

ABSTRACT

The present study offers new insights into the financial trends of leading metaverse tokens, exploring their relationship with public attention measured by Google Trends and global stock indices. Using SADF and GSADF tests for bubble detection as well as Wavelet Coherency for analyzing frequency-dependent movements, the study covers the period from January 1, 2021, to December 31, 2022. This period includes the initial surge in the metaverse following Mark Zuckerberg’s announcement on October 28, 2021 as well as the subsequent NFT hype. Findings reveal that metaverse tokens exhibit bubble-like behavior during peak periods in Google Trends attention measurement. Additionally, the post-hype phase in 2022 shows medium-frequency links between these tokens and the broader technology sector. These results highlight the multifaceted connectedness of digital assets with both, public attention, and the technology sector. Thereby, the study contributes to a broader understanding for policy makers as well as for financial investors.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Supplementary material

Supplemental data for this article can be accessed online at https://doi.org/10.1080/14765284.2023.2286548.

Notes

1. This data is retrieved from the Cryptocurrency Ownership Database (https://triple-a.io/crypto-ownership-data/ - accessed 20/08/2023)

2. For the statistical implementation of this methodology, the Rpackage „rtadfr“is used. For the simulation of the critical values for the SADF test, 2000 repetitions are deployed, for the simulation of the critical values for the GSADF test, 10 repetitions are deployed.

3. For the statistical implementation of this methodology, the Rpackage „biwavelet” is used. The parameter ${\omega }_0$ is set at 6. I applied 300 Iterations each, to calculate the wavelet coherency.

Additional information

Notes on contributors

Florian Horky

Florian Horky is currently a postdoctoral researcher at the Zeppelin University, with additional affiliations in Romania and Slovakia. His research covers a blend of recent and relevant economic topics, specifically focusing on digitalization and the green transition. He maintains a broad behavioral perspective in assessing these topics. Florian Horky has published several papers in highly regarded Journals such as the Journal of Behavioral and Experimental Research, Finance Research Letters, Energy Economics, International Review of Economics and Finance, among others.