Bitcoin : A study on the determinants of the Bitcoin price development

Abstract

Bitcoin is a new evolutionary development within the internet and payment system. Its price has a high volatile nature what brings a lot of attention to this cryptocurrency. This paper investigates the price formation of the Bitcoin by looking at three determinants: speculative position, transaction volume and the utility users obtain from joining the network. To see the correlation between these determinants and the influence it has on the Bitcoin price a multiple regression model has been built over the time period from 2017 to 2019. The model shows that the effect of speculation is heavier than any other variable, reflecting the uncertainty brought by the sensible sentiment of speculators and users.