Abstract: The theories of behavioral finance is applied to analyze herd behavior in bitcoin trading market. The results show that market expectation of bitcoin investors together with trade behavior based on the expectation are interactive with bitcoin price, which makes investors imitate each other, resulting in herd behavior. Moreover, according to the design principle of bitcoin system, the change of market structure will cause stronger herd behavior, characterized by more drastic price fluctuation. Therefore, from the perspective of normalization, measures should be taken to strengthen information revelation of bitcoin fundamental value and Internet security, and reduce the infection coefficient and the impact of herd behavior. The development of bitcoin investment market should be ruled by market mechanism and rational decisions of economic agents.

Key words: bitcoin, imitation and infection model, herd behavior