Is it worth to hold bitcoin?

S. Thomas Kim

Finance Research Letters, 2022, vol. 44, issue C

Abstract: This study examines if holding Bitcoin provides any benefit other than potential price appreciation. An estimation using the convenience yield term in the Cost-of-Carry model shows that the Bitcoin spot contract has a 5.4% premium compared to the futures contract, indicating a holding benefit. Short-selling restrictions in Bitcoin spot markets and voting rights are the sources of the premium. The short-selling restrictions make spot prices be downward sticky. The value of voting rights becomes more observable whenever a ballot is likely. When an important proposal is made to the Bitcoin network, the holding benefit increases by an additional 5.6%.

Keywords: Bitcoin; Cryptocurrency; Bitcoin futures; Convenience yield; Holding benefit; Bitcoin valuation (search for similar items in EconPapers)
JEL-codes: E42 E44 G12 G23 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:44:y:2022:i:c:s1544612321001719

DOI: 10.1016/j.frl.2021.102090

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