Price Fluctuations and the Use of Bitcoin: An Empirical Inquiry

Polasik, Michał; Piotrowska, Anna; Wisniewski, Tomasz Piotr; Kotkowski, Radosław; Lightfoot, Geoffrey

doi:10.2139/ssrn.2516754

Cited by 21 publications

(18 citation statements)

References 101 publications

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“…The fluctuation in bitcoin's price is also influenced by the new adopters of bitcoin itself, or as can be said, the new users and it's spread by word of mouth (Garcia, Tessone, Mavrodiev, & Perony, 2014). The research by Polasik, Piotrowska, Wisniewski, Kotkowski, and Lightfoot (2015) found that the rising number of bitcoin users, whether they treat bitcoin as an investment or as a payment media, also drives the price of bitcoin.…”

Section: Related Workmentioning

confidence: 99%

The New Era of Financial Innovation: The Determinants of Bitcoin’s Price

Sukamulja

Sikora

2018

J. Indones.Econ.Bus.

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Financial innovation has entered a new era in which a digitalized system and cryptocurrency have been created. This paper examines the factors that influence the price movement of bitcoin. This is not a legal currency in Indonesia; the Indonesian government has not made any regulations legalizing bitcoin's use, but it has also not issued any new laws to prohibit the trade in bitcoins and other digital currencies. The demand for, and price growth of, bitcoin are interesting matters to study, especially for Indonesians who still have questions about the progress of bitcoin transactions and the factors that influent them. In Indonesia itself, without any protection from the government, the bitcoin price on December 14, 2017 had already reached more than IDR224.5 million, compare to IDR60 million in October 2017. Bitcoin is the first peer-to-peer currency, and was introduced by Satoshi Nakamoto in 2008. Since its inception, bitcoin has served more than 17 million users, including Indonesians. Bitcoin behaves in a different manner, compared to traditional currencies and the one that affects bitcoin's price is its attractiveness for investors. The Vector Error Correction Model (VECM) is applied to analyze the short-term and long-term influences. VECM is used in this research because the data is stationary in the first difference and has a cointegration relationship. To make the interpretation clearer, the impulse response function and variance decomposition also are included in this research. The result indicates that the macroeconomic indicator, represented by the Dow Jones Industrial Average (DJIA), the demand for bitcoins and the gold price influence bitcoin's price fluctuations in the short-run and long-run. Bitcoin's supply does not influence its price fluctuation in the long-run but does influence it in the short-run. The implication of this research is bitcoin could compete as an alternative investment compared to the capital markets and gold.

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Section: Related Workmentioning

confidence: 99%

The New Era of Financial Innovation: The Determinants of Bitcoin’s Price

Sukamulja

Sikora

2018

J. Indones.Econ.Bus.

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“…Gox in 2014). Polasik, Piotrowska, Wisniewski, Kotkowski & Lightfoot (2015) found no significant effect of changes in supply on Bitcoin returns. If cryptocurrencies are homogenous the choice of design for token creation should not create any variation across the cryptocurrencies tested, instead they should all follow the potential negative impact on returns that an increased supply suggests for Bitcoin.…”

Section: Tokens In Circulationmentioning

confidence: 78%

“…Cryptocurrencies that target generic markets could end up on both ends of the spectrum. The monetary velocity can be proxied by for example output volume (Bouoiyour & Selmi, 2015), number of transactions performed (Polasik et al, 2015) or days destroyed per transaction (Ciaian et al, 2016). Bouoiyour & Selmi (2015) find no significant impact from monetary velocity on the logarithmized Bitcoin prices.…”

Section: Monetary Velocitymentioning

confidence: 99%

Are Cryptocurrencies Homogenous?

Gustafsson¹,

Bengtsson

2019

SSRN Journal

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There exist more than 2000 cryptocurrencies today. Although choices of design and target groups vary across cryptocurrencies, current research primarily focuses on Bitcoin. If the differences in design choices makes cryptocurrencies heterogenous then existing research could be less relevant in explaining how the cryptocurrency market works. Very little is currently known about homogeneity among cryptocurrencies. Therefore, this paper aims to investigate if cryptocurrencies are homogenous. The question of homogeneity among cryptocurrencies is answered via a LASSO-model in which the drivers of returns that have been identified for Bitcoin in the contemporary theoretical framework are applied to a sample of 12 cryptocurrencies, further analysing over time and across design choices of cryptocurrencies. The results show that cryptocurrencies are heterogenous, apart from some similarities in the impact of technical drivers. The cryptocurrency market is highly integrated with evidence of substitution effects. Further, design choices related to demand and supply among cryptocurrencies can in several cases explain the impact of drivers of return. It is important to consider heterogeneity among cryptocurrencies in order to avoid misinterpretation or misdirected regulation of cryptocurrencies.

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“…Kristoufek (2013) shows a very high correlation between the Google Trends, Wikipedia views on Bitcoins and the Bitcoin exchange rate, and, in a later paper, Kristoufek (2015) shows that speculative behaviour and the exchange--trade ratio play a significant role at lower frequencies. Bouoiyour and Selmi (2015) also identify several determinants of the Bitcoin exchange rate, including Google searches, hash rate, ratio of exchange -trade volume and stock market dynamics, while Polasik et al (2015) conclude that Bitcoin returns are mainly driven by news volume, news sentiment and the number of traded Bitcoins.…”

Section: Literature Reviewmentioning

confidence: 99%

Where is the information on USD/Bitcoin hourly prices?

Sebastião¹,

Duarte²,

Guerreiro³

2018

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A navegação consulta e descarregamento dos títulos inseridos nas Bibliotecas Digitais UC Digitalis, UC Pombalina e UC Impactum, pressupõem a aceitação plena e sem reservas dos Termos e Condições de Uso destas Bibliotecas Digitais, disponíveis em https://digitalis.uc.pt/pt-pt/termos.Conforme exposto nos referidos Termos e Condições de Uso, o descarregamento de títulos de acesso restrito requer uma licença válida de autorização devendo o utilizador aceder ao(s) documento(s) a partir de um endereço de IP da instituição detentora da supramencionada licença.Ao utilizador é apenas permitido o descarregamento para uso pessoal, pelo que o emprego do(s) título(s) descarregado(s) para outro fim, designadamente comercial, carece de autorização do respetivo autor ou editor da obra.Na medida em que todas as obras da UC Digitalis se encontram protegidas pelo Código do Direito de Autor e Direitos Conexos e demais legislação aplicável, toda a cópia, parcial ou total, deste documento, nos casos em que é legalmente admitida, deverá conter ou fazer-se acompanhar por este aviso. Where is the information on USD/Bitcoin hourly prices? Autor(es):Sebastião, Helder; Duarte, António Portugal; Guerreiro, Gabriel Where iS the infor mation on uSD/Bitcoin hourly priceS?Helder Sebastião António Portugal Duarte Gabriel Guerreiro Information is mostly transmitted between exchanges within an hour, at least for the main exchanges, although lagged feedbacks occur from the major exchanges. Minor exchanges are merely satellite ones and react to price information with some delay. Bitfinex is the most important exchange: the lagged feedback from this exchange to the market is 18.3%, while the reverse feedback accounts only for 0.6% of the total feedback. Volatility in the major exchanges is the main factor explaining the feedback measures, which sustains the claim that the relative importance of the information -based component of volatility increases with the relative dimension of the exchange.

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Price Fluctuations and the Use of Bitcoin: An Empirical Inquiry

Cited by 21 publications

References 101 publications

The New Era of Financial Innovation: The Determinants of Bitcoin’s Price

The New Era of Financial Innovation: The Determinants of Bitcoin’s Price

Are Cryptocurrencies Homogenous?

Where is the information on USD/Bitcoin hourly prices?

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