Do Major Currency Trading Volumes Explain the Rise of Bitcoin’s Price?
Abstract
We examine the determinants of the Bitcoin price over the period from September 2012 to September 2017. Unlike conventional currency demand models, trading volume is negatively related to the Bitcoin price and the frequency of Internet searches for the term Bitcoin is positively associated with the price. We find strong and significant time trends in the Bitcoin price. These results suggest that the rise in Bitcoin’s price during our observation period was driven largely by speculation.
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