Exploring the Impact of News Sentiment on Defi Coin Returns

This paper examines the factors that affect the returns of Decentralized Finance (DeFi) coins and emphasizes the significance of news-based sentiment in the market. Results show that sentiment has a notable impact on DeFi returns, with negative sentiment presenting greater influence than positive sentiment. Additionally, transaction volume and network security are critical drivers of DeFi coin returns, with smaller coins being more sensitive to news sentiment and exhibiting greater return volatility. The impact of news-based sentiment on DeFi returns is greater during the week, possibly due to the reduced presence of institutional investors and trading algorithms. These findings have implications for investors and policymakers, with evidence suggesting the existence of multiple pathways to manipulate DeFi pricing under certain market conditions