Abstract
The phenomenal rise in the price of bitcoin, prior to the trend reversal of early 2018, resembles a bubble as spectacular as any other bubble. A mere observation of the price rise and a comparison with the common characteristics of a bubble provide anecdotal evidence for the bitcoin bubble. Based on price and volume data up to the end of November 2017, formal empirical evidence is presented by using procedures that do not require the estimation of a fundamental value for bitcoin. The empirical evidence shows that (i) the volume of trading can be explained predominantly in terms of price dynamics; (ii) trading in bitcoin is based exclusively on technical considerations pertaining to past price movements, particularly positive price changes; and (iii) the price of bitcoin is an explosive process. These findings are interpreted to imply a price bubble.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
