The Economics of BitCoin Price Formation
This paper analyses the relationship between BitCoin price and supply-demand fundamentals of BitCoin, global macro-financial indicators and BitCoin attractiveness for investors. Using daily data for the period 2009-2014 and applying time-series analytical mechanisms, we find that BitCoin market fundamentals and BitCoin attractiveness for investors have a significant impact on BitCoin price. Our estimates do not support previous findings that the macro-financial developments are driving BitCoin price.
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