Bubble dynamics: Understanding the development trajectory of the cryptocurrency market through its bubble periods

This paper surveys the academic literature concerning the bubble periods in the cryptocurrency market. This study aims to understand the historical and developmental trajectory of the cryptocurrency market through its various bubble periods. This study also identifies the factors contributing to bubble formation. The study is based on the PRISMA framework for literature review. Based on the review, the cryptocurrency market experienced four major bubbles in 2011, 2013, 2017, and 2021. The enthusiasm for cryptocurrency innovation triggered the 2011 bubble. The 2013 bubble was influenced by the economic crisis that channeled funds to the cryptocurrency market due to their centralized nature. In 2017, the possibilities of Web 3.0 and altcoins increased the enthusiasm of crypto investors. The crypto winter of 2017 subsided with the rise of non-fungible tokens (NFTs), stimulating interest and driving prices in the cryptocurrency market. Specifically, speculation, media coverage, investor sentiment, herding, volatility, and coexplosivity are significant factors that trigger bubble development. Moreover, government policies and regulations can be crucial in sustaining and bursting the bubbles. This review offers a comprehensive view of academic studies on bubble periods in the cryptocurrency market. This study also provides a chronological overview of major bubble periods that have significantly influenced the market development. This study is one of the first reviews conducted to understand the development of the cryptocurrency market through bubble periods and the factors contributing to bubble formation. The study also follows the PRISMA framework for structuring the review, as the literature lacks reviews on bubble periods on the basis of this framework.