Information Cascade in Crypto Market
Authors in this paper The Wisdom of Crowds and Information Cascades in FinTech: Evidence from Initial Coin Offerings give an interesting data-based analysis on how information cascade is generated in crypto market —- certain prominent crypto influencers/analysts lead up to a herding effect in the first round investment (ICO aka Initial Coin Offerings) in crypto market.
Initial Coin Offerings (ICO) is basically equivalent to Initial Public Offering (IPO) in traditional financial market, but with a new fancy name. The name of ICO is quite outdated now in the crypto space because of legal issues in various countries following up the uprising number of investors: it is now replaced by Initial Exchange Offerings (IEO), which still give the same functionality as IPO while having no legal issue in most countries.
We can consider crypto influencers/analysts and crypto investors as the same kind of node: crypto influencers are connected to thousands of individual investors (nodes) while most investors are only connected to a few nodes (probably way less than 100 before they make decisions in investing in a certain token in real life). If the number of influencers/analysts who are recommending investing certain token is big enough, these nodes can easily cause an information cascade that changes the opinion of individual investors.
References:
https://www.fdic.gov/bank/analytical/cfr/bank-research-conference/annual-18th/17-li.pdf