DRIVERS OF BITCOIN PRICES: AN EMPIRICAL ANALYSIS OF INDIA

Abstract

Bitcoin, the first per-to-peer based cryptocurrency, has gained attention globally since its inception. The currency has experienced an exponential increment in its market capitalization over the years, highlighting the growing investors’ interest in the decentralized currency. However, despite its leading position compared to other cryptocurrencies such as Etheruem and XRP, the number of studies conducted previously to identify the determinants of Bitcoin prices is scare. Additionally, studies with a focus on the drivers of Bitcoin prices in the Indian macroeconomic environment are few. With this backdrop, the presented study is aimed at empirically analysing the determinants of Bitcoin prices in the India for a period 156 weeks spanning 2017-2019 using VECM. The empirical findings indicate that Bitcoin supply, gold prices, money supply, and Bitcoin trade volume significantly impact the Bitcoin prices to remove the deviations from its equilibrium price.