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Is Bitcoin Business Income Or Speculative Foolery? New Ideas Through An Improved Frequency Domain Analysis

Author

Listed:
  • JAMAL BOUOIYOUR

    (CATT, University of Pau, France)

  • REFK SELMI

    (ESC, University of Manouba, Tunisia)

  • AVIRAL KUMAR TIWARI

    (IFHE-IBS University, Hyderabad, India)

Abstract

The present study addresses one of the most problematic phenomena: Bitcoin price. We explore the Granger causality for two relationships (Bitcoin price and trade transactions; Bitcoin price and investors' attractiveness) from a frequency domain perspective-based on unconditional and conditional data analysis. Accurately, this research empirically assesses the causal links between these variables unconditionally on the one hand and conditioning upon relevant control variables (recorded in literature) on the other hand. The observed outcomes reveal some differences with respect to the frequencies involved, highlighting the difficulty to reach clearer insights and better paths into this nascent crypto-currency. Beyond the nuances of short-, medium- and long-run frequencies, this paper confirms the extremely speculative nature of Bitcoin without overlooking its usefulness in economic reasons. The consideration of the Chinese market index, the hash rate, the monetary velocity and the estimated output volume has led to solid and meaningful findings connecting further Bitcoin to speculation.

Suggested Citation

  • Jamal Bouoiyour & Refk Selmi & Aviral Kumar Tiwari, 2015. "Is Bitcoin Business Income Or Speculative Foolery? New Ideas Through An Improved Frequency Domain Analysis," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 10(01), pages 1-23.
    • Handle: RePEc:wsi:afexxx:v:10:y:2015:i:01:n:s2010495215500025
    DOI: 10.1142/S2010495215500025
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    References listed on IDEAS

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    1. Pavel Ciaian & Miroslava Rajcaniova & d’Artis Kancs, 2016. "The economics of BitCoin price formation," Applied Economics, Taylor & Francis Journals, vol. 48(19), pages 1799-1815, April.
    2. Bouoiyour, Jamal & Selmi, Refk, 2014. "What Bitcoin Looks Like?," MPRA Paper 58091, University Library of Munich, Germany.
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    6. Matija Piv{s}korec & Nino Antulov-Fantulin & Petra Kralj Novak & Igor Mozetiv{c} & Miha Grv{c}ar & Irena Vodenska & Tomislav v{S}muc, 2014. "News Cohesiveness: an Indicator of Systemic Risk in Financial Markets," Papers 1402.3483, arXiv.org.
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    More about this item

    Keywords

    Bitcoin price; trade transactions; investors' attractiveness; unconditional frequency domain analysis; conditional frequency domain analysis; E31; E41; G15; C12;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General

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