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On- and off-chain demand and supply drivers of Bitcoin price

Author

Listed:
  • Pavel Ciaian
  • d'Artis Kancs
  • Miroslava Rajcaniova

Abstract

Around three quarters of Bitcoin transactions take place off-chain. Despite their significance, the vast majority of the empirical literature on cryptocurrencies focuses on on-chain transactions. This paper presents one of the first analysis of both on- and off-chain demand- and supply-side factors. Two hypotheses relating on-chain and off-chain demand and supply drivers to the Bitcoin price are tested in an ARDL model with daily data from 2019 to 2024. Our estimates document the differential contributions of on-chain and off-chain drivers on the Bitcoin price. Off-chain demand pressures have a significant impact on the Bitcoin price in the long-run. In the short-run, both demand and supply drivers significantly affect the Bitcoin price. Regarding transactions on the blockchain, only on-chain demand pressures are statistically significant - both in the long- and short-run. These findings confirm the dual nature of the Bitcoin price dynamics, where also market fundamentals affect the Bitcoin price in addition to speculative drivers. Bitcoin whale trading has less significant impact on price in the long-run, while is more pronounced contemporaneously and one-period lag.

Suggested Citation

  • Pavel Ciaian & d'Artis Kancs & Miroslava Rajcaniova, 2026. "On- and off-chain demand and supply drivers of Bitcoin price," EERI Research Paper Series EERI RP 2026/01, Economics and Econometrics Research Institute (EERI), Brussels.
    • Handle: RePEc:eei:rpaper:eeri_rp_2026_01
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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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