A STUDY ON THE DETERMINANTS THAT INFLUENCE THE PRICE OF BITCOIN
Asia Pacific Journal of Emerging Markets, Vol. 7, No. 2, 2023 ISSN: 2706-5634
Authors: Ngoh Hui Joe, Patricia Rayappan
ABSTRACT
This study aims to examine the determinants that influence the price of Bitcoin. The determinants used in this study include Bitcoin supply, Bitcoin hash rate, and gold price. The price of Bitcoin is the dependent variable in this study. The secondary data was extracted from online websites, which showed historical data on Bitcoin price, supply, hash rate, and gold price. All data collected are based daily from 1 January 2019 to 31 December 2022. A two-stage least squares (2SLS) regression model is applied to assess the impact of Bitcoin supply, hash rate, and gold price on Bitcoin price. The results of this study show that Bitcoin supply has a positive and significant effect on Bitcoin price. In contrast, the Bitcoin hash rate negatively and significantly affects Bitcoin price. However, this study also found that gold prices negatively and insignificantly impact Bitcoin prices. Besides, this study discovered that gold price has the most negligible impact on the price of Bitcoin, indicating that gold price does not affect Bitcoin price. On the contrary, the supply of Bitcoin is the most influential factor in Bitcoin’s price. The study results provide implications for Bitcoin holders, investors intending to purchase Bitcoin, governments, academic institutions, FinTech students, and future researchers. Through the results of this study, they can better understand the significant factors that cause Bitcoin price volatility.
INTRODUCTION
Bitcoin is one of the most famous types of cryptocurrencies and the first to be widely adopted. It is also often described as a digital or virtual currency because it is a completely virtual type of money (BBC, 2018). Bitcoin was created by a group or a person named Satoshi Nakamoto. He published a regulatory document in 2008, known as the “white paper”, regarding creating a digital currency to replace cash offered by a central organization (Coinbase, 2022). This regulatory document proposed the concept of creating Bitcoin. 2009, Bitcoin was officially launched and started being used (Iredale, 2018). The technology behind Bitcoin is blockchain, which is a distributed ledger technology. This indicates that all Bitcoin transactions on the blockchain are carried out through a peer-to-peer network (Coinbase, 2022). Therefore, Bitcoin is not owned and controlled by a central authority or bank; everyone can participate. As Bitcoin has many unique properties, it allows for exciting uses that no previous payment system could ever cover—for example, fast peer-to peer transactions, low processing fees and global payments (Bitcoin, 2009)…..
Keywords: Bitcoin, Gold Price , Hash Rate , Supply of Bitcoin
References
Reference to this paper should be made as follows: Joe, N. H., & Rayappan, P. (2023). A study on the determinants that Influence the price of Bitcoin. Asia Pacific Journal of Emerging Markets, 7(2), 119-152.