Surviving the Storm: Hazard Models and Signaling Shocks in Bitcoin Prices

Daniela Balutel and Marcel Voia

Revue française d'économie, 2023, vol. Vol XXXVIII, issue 4, 21-46

Abstract: This paper explores factors influencing Bitcoin price fluctuations and identifies key indicators for predicting market movements. Positive price trends are associated with increased network activity, larger block sizes, and higher returns on investment, providing potential opportunities for investors. Conversely, increased values in Address Action Count, Capital Market Value, Coinbase Issuance, and Return on Investment suggest a higher risk of negative price shocks and potential downward market trends. The study also highlights mitigating factors like Bitcoin capitalization, current supply, and current velocity, offering valuable insights for enhancing market stability. Furthermore, the findings suggest that as the absolute magnitude of price shocks increases, the occurrence of negative price shocks surpasses that of positive ones. Simultaneously, there is a significant decrease in the predictability of negative shocks relative to the predictability of positive price shocks.

Date: 2023
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