Empirical Research On Factors Affecting The Price Of Bitcoin

The price of Bitcoin experienced unprecedented volatility from 2018 to 2021,sparking intense interest in the market and society.At the beginning of 2020,one bitcoin was worth more than $7,000,and by April 2021,it has risen to more than $60,000.However,with a new round of cryptocurrency sanctions led by the Chinese government,the price quickly fell below$40,000.Based on this realistic background,this paper analyzes the reasons for this result.This paper discusses the factors influencing the price of bitcoin,and constructs a new index for empirical research.In chapter3,the author systematically analyzes various factors that affect the price of bitcoin,which provides a theoretical basis for chapter4 and chapter5.By introducing the new influencing factor of consensus mechanism,this paper systematically studies the internal mechanism of consensus mechanism affecting other influencing factors and ultimately bitcoin price.Based on the theoretical analysis,this paper constructs ntg indicators and other related indicators,and uses VAR method to carry out empirical research.In order to avoid the problems existing in previous researchers,this paper uses natural language processing technology to mine the text of news reports and constructs a new index--ntg index.This index improves the ambiguity of sentiment subject commonly existing in structured data and enriches empirical analysis of bitcoin price and government.In addition,this paper selects US dollar gold,miners’returns and S&P 500 index,corresponding to the scarcity factors,miners’ factors and reality factors that affect the price of Bitcoin.The empirical model used in this paper is the VAR model,including the Granger test,impulse response and variance decomposition.The empirical results show that core index and bitcoin price have significant interaction,which proves that the Bitcoin market is still an inefficient market with insider trading risks.The model also reveals the impact of gold,the stock market and miner earnings on the price of bitcoin.The unsignificant interaction of bitcoin price and rpa index shows that bitcion mining will not last forever,which is due to the drawbacks of bitcoin consensus mechanism.Gold’s significant interaction clearly suggests that bitcoin is somewhat risk-resistant,but it stems from the artificial scarcity of consensus mechanisms,making it extremely risky and volatile.To sum up,government regulation of cryptocurrencies such as bitcoin is reasonable and necessary.In the long run,it is inevitable for cryptocurrencies to be regulated and supervised by governments.