Cryptocurrency pricing determining factors

Abstract

Cryptocurrencies have emerged as a popular investment option in recent years. This paper aims to identify and analyse the factors that determine the pricing of cryptocurrencies. The existing problem is the lack of a comprehensive framework for understanding cryptocurrency pricing. The study is necessary to help investors make informed decisions about investing in cryptocurrencies. To examine determinants of cryptocurrency prices, the study used five cryptocurrencies and employs the GMM techniques. The study used multiple variables (coin prices; coins issued per day; difficulty and market capitalisation) to test how they can determine cryptocurrency prices. Findings showed that coins that uses higher hash rate, which has higher difficulty, higher market capitalisation and has lower number of coins that are mined on daily basis, is likely to have its pricing improved over short to medium terms. Overall, this research work provides valuable insights into the factors that determine the pricing of cryptocurrencies.