Using the unique characteristics of Bitcoin such as a world virtual currency with common intrinsic value and synchronous transactions in multiple countries, and employing normal distribution test and sup ADF test, this paper examines the Bitcoin bubble from the perspectives of price deviation and explosiveness, and provides empirical evidence for the existence of the Bitcoin bubble. It shows that Bitcoin is a perfect financial speculation, speculative factor is the main reason for the bursting of the Bitcoin bubble, and a lack of supervision significantly accounts for constant expansion of the Bitcoin bubble. In addition, the exaggeration of the advantages of Bitcoin leads to overvaluation and possible market manipulation, which is the important reason for the long-term existence of Bitcoin bubble. The authorities need to pay early attention to internet finance products, promptly formulate and improve relevant policies, reasonably guide the investors’ rational investment, promote the perfection of transaction mechanisms, prevent market manipulation and maintain the healthy and stable development of internet finance.
Price Bubbles in Bitcoin:Evidence,Causes and Implications
Journal of Shanghai University of Finance and Economics Vol. 19, Issue 02, pp. 50 - 62 (2017) DOI:10.16538/j.cnki.jsufe.2017.02.005
Cite this article
Deng Wei. Price Bubbles in Bitcoin:Evidence,Causes and Implications[J]. Journal of Shanghai University of Finance and Economics, 2017, 19(2): 50–62.