 A new method to verify Bitcoin bubbles: Based on the production costJinwu Xiong, Qing Liu and Lei Zhao The North American Journal of Economics and Finance, 2020, vol. 51, issue C Abstract: As the first kind of digital cryptocurrency, the Bitcoin price cycle provides an opportunity to test bubble theory in the digital currency era. Based on the existing asset bubble theory, we verified the Bitcoin bubble based on the production cost with the application of VAR and LPPL models, and this method achieved good predictive power. The following conclusions are reached: (1) PECR is constructed to depict the deviation degree between the price and production cost, while BC is used to illustrate the bubble size in the price, and both are effective measures; (2) the number of unique addresses is a suitable measure of the use value of Bitcoin, and this result has passed the Granger causality test; (3) PECR and BC are verified via the LPPL model, and the next large bubble is expected in the second half of 2020. Considering that Bitcoin will see 'output halved' in May 2020, this prediction is a high-probability event. Keywords: Bitcoin bubble; Production cost; PECR; BC; VAR; LPPL (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:51:y:2020:i:c:s1062940819303602 DOI: 10.1016/j.najef.2019.101095 Access Statistics for this article The North American Journal of Economics and Finance is currently edited by Hamid Beladi More articles in The North American Journal of Economics and Finance from Elsevier |
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