Fraud in the cryptocurrency market: a model for predicting HYIP activity pattern

Abstract

HYIP is a type of high-risk investment that guarantees high returns but no safety. The profits given to investors lead to repeated investment behavior with positive feedback, and the herd behaviors of investors lead to the exponential growth of investment funds. This mechanism is similar to the bubble in the stock market. In this study, we analyze its mechanism using data from the cryptocurrency. We also forecast the growth of HYIP funds by applying an LPPLS model that predicts the stock prices in the bubble.