Economic and Financial Factors Driving Cryptocurrency Transactions: Bitcoin Price Formation


Cryptocurrency is a digital currency that uses a strong cryptographic ledger securing online transactions for purchasing goods and services. Cryptocurrencies have no global borders and are easy to use. A wallet is created and used immediately to save transactions. Although crypto currencies have come to the fore especially in recent years, they have a historical process. Cryptocurrencies increased their popularity especially in the Coronavirus (COVID-19) epidemic. Despite the increasing volume of cryptocurrencies and strong market gain, famous economists are skeptical of these currencies. The purpose of this study is to determine the economic and financial indicators affecting the Bitcoin price between December 11, 2017 – March 31, 2021. Since the variables have unit roots in level and are stationary in their first differences, the cointegration test is suitable in the study. According to the results of the Johansen cointegration test, there is at most 1 cointegration equation among the variables in long run. Vector Error Correction Model shows that the economic and financial variables have no effect on the Bitcoin price in the short term. Bitocion is a digital asset which can be easily speculated.
Keywords: Cryptocurrency, Bitcoin price, Cointegration, Vector Error Correction Model.


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