A systematic literature review on the determinants of cryptocurrency pricing

Cryptocurrency funds are not authorized for sale to retail investors in Singapore. The Hong Kong Monetary Authority (HKMA) published a discussion paper[11] on crypto-assets and stablecoins inviting views from the industry and public on the relevant regulatory approach. A stablecoin is any cryptocurrency designed to have a stable price, typically through being reserved, backed, or pegged to an underlying asset such as a commodity or currency, or through algorithmic mechanisms to its reference asset. The potential use cases for stablecoins are far-reaching and potentially disruptive to the established banking and payments industries. This report is a follow-up to Regulatory Intelligence’s “Cryptos on Rise” special report[4] published in 2021. That report highlighted the need for policymakers, regulators and firms all to play their part in ensuring that cryptos are as « safe » as possible, not only in terms of investment risk but also with regards to regulatory certainty and cyber resilience.

• If you are uncertain about which cryptocurrency to purchase among altcoins, take a closer look at Litecoin.
• To generate trade ideas, traders may combine technical indicators with subjective forms of technical analysis, such as chart patterns.
• Trading options contracts gives you the right, but not the obligation, to buy or sell an underlying asset at a specific price by a set point of expiry.
• The scientific approach used in the development of Cardano allows for the avoidance of many errors, but at the same time, it may result in slower network development.
• We have already provided an overview of the most popular cryptocurrencies and the most attractive coins.
• Unlike Bitcoin, the authors provide evidence that gold can be considered as a hedge for China.
• While Binance is a centralized company, BNB Chain is an independent Ethereum-like network leveraging a PoS algorithm called Proof of Staked Authority (PoSa).

Technical analysis

Miroslav (Fil 2019) investigated the applicability of standard pairs trading approaches on cryptocurrency data with the benchmarks of Gatev et al. (2006). Secondly, the long-run equilibrium is calculated and pairs trading strategy is defined by the spread based on the values. Overall, the model was able to achieve a 3% monthly profit in Miroslav’s experiments (Fil 2019).

• The top list includes popular cryptocurrencies like Bitcoin and Ethereum, as well as cryptocurrencies with the best growth potential, which were recently known only to crypto enthusiasts.
• Poland’s AML regime adopted AMLD5, which had a significant impact on the approach to crypto businesses.
• Bank Indonesia, the country’s central bank, has banned the use of cryptocurrencies as a payment tool.
• Other studies reveal that bifurcations in the cryptocurrency market also pose a risk, since it weakens the market position and the pricing influence of cryptocurrencies (Tu & Xue, 2019).
• In the case of 21Shares’s ETPs, our products replicate the performance of the crypto asset (Bitcoin, Ethereum, Ripple, Bitcoin Cash) or the index it tracks (HODL5, BIT10, ABBA).

Plan your trading

Bait and Switch Scams – A scam to mislead buyers, whereby a seller advertises an appealing but ingenuine offer to sell a financial product or service that the seller does not actually intend to sell. Instead, the seller offers a sub-par, defective, or unwanted product or service. 2019 IEEE International Conference on Signal Processing, Communications and Computing (ICSPCC). The SEC did not initiate proceedings against the current owners of EtherDelta. While Coburn was the original creator or developer of the platform, he sold EtherDelta to foreign buyers in November 2017 and ceased collecting fees related to the platform as of December 16, 2017.

Data & document management

• Further analysis suggests an adverse relationship between US bond interest rate and US Dollar index which implies that investors may find a safe haven in cryptocurrencies when the US dollar is devalued or US Bond yield decreases.
• The Commission may draw upon its experience with ATS platforms to develop regulations governing cryptocurrency secondary market trading platforms.
• This paper is the first to systematically and comprehensively review the relevant literature on cryptocurrency to identify the factors of pricing fluctuation.
• The results showed that permanent volatility appears to be driven by major market developments and popular interest levels.
• The only time the amount of crypto you hold will change is if you buy or sell more of it.

Alternative trading systems are SEC-regulated electronic trading systems that match orders for buyers and sellers of securities. Trading in U.S. government securities on such platforms has grown significantly in recent years. The level of regulatory oversight and investor transparency at these venues has not matched similar platforms for corporate bonds or equity securities.

Worldwide Options Trading

The SV models appear to be more robust to misspecifications as well as to radical changes in the time-series (Tiwari et al., 2019). Furthermore, to explain Bitcoin price volatility the AR-CGARCH model seems to be an optimal model in terms of goodness-of-fit, suggesting that it is important to consider the short and the long run components of the conditional variance (Katsiampa, 2017). Moreover, the generalized autoregressive score (GAS) models specifications with heavy-tailed distributions seem to improve the goodness-of-fit as well as the forecast performance for Bitcoin risk and returns (Troster et al., 2019). Other study developed a model to analyze the default risk in cryptocurrencies. The developed model is based on a linear discriminant analysis to predict cryptocurrency defaults (Grobys & Sapkota, 2020). The model has the ability to serve as a screening tool for investors since it can explain 87% of bankruptcies in the cryptomarket, after only one month of trading (Grobys & Sapkota, 2020).

#2 Crypto Prediction: Ethereum is overdue for a run?

During the global economic and financial crisis of 2008, gold prices rose dramatically, while other assets suffered losses (Beckmann et al., 2015). It is considered the oldest and the most famous cryptocurrency (Schinckus et al., 2020; Schinckus, 2021). Abay et al. (2019) attempted to understand the network dynamics behind the Blockchain graphs using topological features. The results showed that standard graph features such as the degree distribution of transaction graphs may not be sufficient to capture network dynamics and their potential impact on Bitcoin price fluctuations. Omane-Adjepong et al. (2019) applied wavelet time-scale persistence in analysing returns and volatility in cryptocurrency markets. The experiment examined the long-memory and market efficiency characteristics in cryptocurrency markets using daily data for more than two years.

Is Litecoin a Good Investment?

Confirmation is a critical concept in cryptocurrencies; only miners can confirm transactions. Miners add blocks to the Blockchain; they retrieve transactions in the previous block and combine it with the hash of the preceding block to obtain its hash, and then store the derived hash into the current block. Miners in Blockchain accept transactions, mark them as legitimate and broadcast them across the network. After the miner confirms the transaction, each node must add it to its database. In layman terms, it has become part of the Blockchain and miners undertake this work to obtain cryptocurrency tokens, such as Bitcoin. In contrast to Blockchain, cryptocurrencies are related to the use of tokens based on distributed ledger technology.

Cryptocurrency price prediction – Conclusion

Khuntia and Pattanayak (2018) applied the adaptive market hypothesis (AMH) in the predictability of Bitcoin evolving returns. The consistent test of  (Domínguez and Lobato 2003), generalized spectral (GS) of (Escanciano and Velasco 2006) are applied in capturing time-varying linear and nonlinear dependence in bitcoin returns. The results verified Evolving Efficiency in Bitcoin price changes and evidence of dynamic efficiency in line with AMH’s claims. Gradojevic and Tsiakas (2021) examined volatility cascades across multiple trading ranges in the cryptocurrency market. Using a wavelet Hidden Markov Tree model, authors estimated the transition probability of propagating high or low volatility at one time scale (range) to high or low volatility at the next time scale.

An alternative liquidity proxy

Due to the scientific approach and use of formal methods, the development and implementation of new features may take a lot of time. Cardano is a scalable project with robust support for the development of sophisticated and complex decentralized applications. The use of the Scrypt algorithm for mining may result in the centralization of mining power. Despite Cosmos’ technical superiority and primacy, its popularity remains low due to the lack of active marketing.

How to predict cryptocurrency prices using technical analysis?

• It is mandatory to control for risk on long term strategies due to the increase in the holding period, directly proportional to the risk incurred by the trader.
• Toncoin is a relatively new cryptocurrency that entered the TOP15 in March 2024 and subsequently secured a position in the top 10 digital assets by capitalization a few months later.
• Tether (USDT) was originally launched on October 6th, 2014 as Realcoin by Brock Pierce, Reeve Collins, and Craig Sellars (a member of the Omni Foundation).
• The legal framework[146] is being heralded as one of the most comprehensive regulatory structures and standards in the world while also welcoming to the industry.
• The main issue with Shiba Inu and Dogecoin is that they are merely payment currency.
• All cryptocurrencies illustrate instances of high price volatility and the highest extreme price jumps is recorded in January 2018.
• The exact address changes over time due to the fluid nature of deposits and withdrawals.
• Promulgated in 1998, Regulation ATS offers a set of rules governing emerging alternative trading platforms.

In 2024, when selecting a cryptocurrency to invest in, consider the global rollout of the blockchain platform Ethereum 2.0. It includes significant enhancements in security, the expansion of the decentralized finance (DeFi) concept, and an increase in the blockchain network’s speed. These improvements have the potential to drive the growth of promising cryptocurrencies. There Stock Method Max was a period in the history of the crypto market when Ethereum growth was five times more intense than the BTC market. It is possible that the world’s second-largest coin will hit a new all-time high. After a ten-year approval process, the US Securities and Exchange Commission (SEC) has greenlighted the first BTC-based exchange-traded funds (ETFs) in the crypto world.

II. The Expanding Ecosystem of Exchanges

Firms will be subject to the supervision of the Financial Supervision Authority[72], which will require minimum capital standards, IT standards, audits and reporting. In January 2018, the Central Bank of Ecuador[51] informed citizens that bitcoin “is not a means of payment authorized for use in the country.” It clarified that bitcoin is not backed by any authority as its value is based on speculation. Financial transactions are not controlled, supervised, or regulated by any entity in the country, and this presents a financial risk to those who use it.

• The plan is to onboard as many new users within the Latin American market, and use the launch of MXNT as a testing ground for future fiat-pegged currencies in the region.
• Tether continues to remain the center of speculation in cryptocurrency markets and blockchain networks with many users doubting their liquidity and stability.
• Answer a few questions about your expectations of the future stock price movement, and the Options Wizard will present you with some standard strategies you can filter by aggressiveness, Probability of Profit, Max Gain and more.
• Polish tax rates on cryptos are 19% plus an additional 4% for those with income in excess of PLN 1 million.
• GARCH models are the most appropriate models that represent volatility in the financial markets.
• They trade more frequently, hold positions shorter and realize lower returns (Hasso et al., 2019).
• USDT also enjoys the same luxuries as other cryptocurrency tokens on the network, peer-to-peer trading and PoW or PoS security, which makes it a desirable hedge for traders and users alike.
• More so, the conventional ARDL models regularly possess complex dynamic structures that are characterized by first differences and lags of first differences, several lags, concurrent values and so on.

Is possible to learn how to predict crypto price trends?

(The alpha features come from paper “101 Formulaic Alphas” (Kakushadze 2016).) Vo and Yost-Bremm (2018) applied RFs in High-Frequency cryptocurrency Trading (HFT) and compared it with deep learning models. Minute-level data is collected when utilising a forward fill imputation method to replace the NULL value (i.e., a missing value). The authors also compared F-1 precision and recall metrics between RF and Deep Learning (DL).

• That’s a mind-boggling amount, making Satoshi the biggest whale in the Bitcoin ocean.
• Bitcoin mining is a possible catalyst for accelerating the global shift towards clean energy and effective power grid management.
• Cryptocurrencies such as bitcoin are considered securities and fall outside regulatory oversight.
• We were the first to publish our Proof of Reserves back in 2021, and continue to provide a regularly updated Proof of Reserves and Liabilities, accessible at any time.
• In addition, this literature review reveals several model specifications that are found to be appropriate to measure cryptocurrency’s volatility.
• It provides an overview for each country, the regulatory state of play and links to the primary financial regulatory authorities or other relevant information.
• You can also get exposure to these coins on futures and CFD trading platforms.
• Table 2 presents the top 10 most cited authors regarding the cryptocurrency market microstructure literature.

Central and South America

Moreover, changes in domestic regulation produce large international spillovers across cryptocurrency markets (Borri & Shakhnov, 2020). Further evidence reveals that even after controlling for past volatility and skewness, size and volume, there is evidence of a strong presence of small price bias in cryptocurrency investors. Thus, indicating the presence of inefficiency in the cryptocurrency market (Aloosh & Ouzan, 2020). It is also shown that the cryptocurrency market is weak-form inefficient, and that its inefficiency seems to increase over time (Vidal-Tomás et al., 2019b). Further evidence reveals presence of a cross-section dependence amongst the most popular cryptocurrencies; evidencing that the cryptomarket is inefficient, specially the top ranked cryptocurrencies (Hu et al., 2019a).

Why Day Trade Cryptocurrencies?

The impact of halving, a surge in trading activity, positive real-world data, and other positive factors are contributing to an upward price movement. Despite the recent surge in popularity of Litecoin, its trading volumes remain comparatively low against those of its competitors. This indicates that demand for the coin and its liquidity are not yet at a significant level. Litecoin employs time-tested cryptographic protocols and boasts a vast network of miners, ensuring robust security and resilience against potential attacks. The crypto project has formed strategic alliances with over 100 international financial institutions and companies, including Crédit Agricole, the Bank of England, Bank of America, and others. Compared to other decentralized cryptocurrencies, Solana exhibits a higher degree of centralization.

Bibliometric analysis

Traders can take a position on the price of a declining economy by opting to short a currency. When you trade forex, you’re inherently buying one currency and selling another. For example, when you sell GBP/USD, you would do so if you believe the value of the pound will fall in comparison to the US dollar.

Availability of data and materials

The results also suggested that safer asset extraction is more important for volatility linkages between Bitcoin exchanges relative to trading volumes. Fasanya et al. (2020) quantified returns and volatility transmission between cryptocurrency portfolios by using a spillover approach and rolling sample analysis. The results showed that there is a significant difference between the behaviour of cryptocurrency portfolio returns and the volatility spillover index over time. Given the spillover index, the authors found evidence of interdependence between cryptocurrency portfolios, with the spillover index showing an increased degree of integration between cryptocurrency portfolios.

Leveraged tokens are assets that are typically developed using the ERC-20 or EVM-compatible protocols. These tokens are easy to use and are traded on the exchange along with other assets. On the other hand, they allow traders to increase returns from changes in underlying asset prices using financial leverage without the need to manage margins or borrowings. Fireblocks is an enterprise-grade platform delivering a secure infrastructure for moving, storing, and issuing digital assets. Fireblocks enables exchanges, custodians, banks, trading desks, and hedge funds to securely scale digital asset operations through patent-pending SGX & MPC technology.

The Report does not articulate a test for determining the specific coin and token attributes that satisfy the final two elements of the Howey test. The second exercise examines the extent to which our results are driven by the methodology used. For this purpose, we apply the elastic net (ENet) estimator of Zou and Hastie (2005), an alternative machine learning method.

ETH is a $432 billion market as of today, and its daily trading volume exceeds $15 billion. Mass popularization of cryptocurrency through native integration with messengers and social media. Cardano was created to provide everyone with a reliable and scalable smart contracts platform for developing decentralized applications. The Cardano platform’s distinctive two-tier architecture – comprising the Cardano Computational Layer and the Cardano Settlement Layer – enables the platform to fulfill this objective.

Financial authorities there have yet to clarify whether a recently implemented ban on all cryptocurrency transactions includes producing, selling or trading NFTs. As a result, some Chinese digital art and entertainment creators have turned to Hong Kong to issue NFTs. In February 2022, the New York Stock Exchange filed an application to register the term “NYSE” for a marketplace for NFTs, appearing to take a step closer to setting up an online trading place for cryptocurrencies and NFTs. There is also concern that uncoordinated regulatory actions may facilitate potentially destabilizing capital flows. This may be an indication of the significant economic value of the underlying technological innovations such as the blockchain, although it might also reflect froth in an environment of stretched valuations. Based on this crux, we attempt to examine the static and dynamic volatility spillover between US/Chinese stock market cryptocurrencies and gold with the outbreak of the Covid-19 pandemic using Diebold and Yilmaz’s (2012) method.

This study contributes to the unconsolidated cryptocurrency literature, with a systematic literature review focused on cryptocurrency market microstructure,Footnote 1 revealing complex network associations, and a detailed integrative analysis. Halving is another technical factor that influences the supply and pricing of Bitcoin (Ibrahim et al., 2020; Meynkhard, 2019). The term Bitcoin halving refers to a process in which the reward for mining Bitcoin transactions is reduced by half (Ramos & Zanko, 2020). Miners can earn new Bitcoins as remuneration for their work, but the block subsidy will decrease by 50% every four years.

The plan also established a flexible regulatory environment for technology testing and development. The Lithuania State Tax Inspectorate considers cryptos as “property” and levies a 15% rate on the gains. Income from mining activities is only considered as income upon the sale of the cryptos after mining.

Additionally, the material accessible through this website does not constitute a representation that the investments described herein are suitable or appropriate for any person. For the complete terms and condition, as well as the privacy policy, please see English version. The Net Asset Value (NAV) per unit of an ETP denotes the dollar value of the underlying units.

We can study linkages between digital assets, especially Stablecoins and Latin American equity markets. These linkages help American Latin investors to determine whether cryptocurrencies can reduce the equity risk during crisis periods. Corbet et al. (2019) gave a systematic analysis of cryptocurrencies as financial assets. Brauneis and Mestel (2019) applied the Markowitz mean-variance framework in order to assess the risk-return benefits of cryptocurrency portfolios.

So, let’s start with the intricacies of Bitcoin ownership, from the enigmatic figure of Satoshi Nakamoto to contemporary crypto titans, and dissect what this concentration of wealth means for the future of Bitcoin and its ethos of decentralization. This guide delves into the realm of Bitcoin’s wealthiest whales (yes, this includes literal countries), shedding light on the top 100 largest Bitcoin wallet addresses. Unveiling who controls the lion’s share of BTC not only illuminates the current landscape of digital wealth but also hints at the potential influence these holders wield over the market’s dynamics. (To be exact, 3.125 BTC is issued when a miner has successfully mined a single block.). To keep the process in check, the rewards given for mining bitcoin are cut in half almost every four years.

Arbitrage Trading Software System introduced in that paper presented general principles and implementation of arbitrage trading system in the cryptocurrency market. We introduce the work about several different cryptocurrency trading software systems in « Cryptocurrency trading software systems » section. « Systematic trading » section introduces systematic trading applied to cryptocurrency trading. In « Emergent trading technologies » section, we introduce some emergent trading technologies including econometrics on cryptocurrencies, machine learning technologies and other emergent trading technologies in the cryptocurrency market. Section 8 introduces research on cryptocurrency pairs and related factors and crypto-asset portfolios research.

The remaining researching topics (prediction of volatility, trading system, technical trading and others) have roughly one-third share. Sentiment analysis, a popular research topic in the age of social media, has also been adopted to improve predictions for cryptocurrency trading. This data source typically has to be combined with Machine Learning for the generation of trading signals.

These events can significantly affect investor sentiment and market dynamics as a result of cryptocurrency price fluctuation (Corbet et al., 2022). Zhu et al. (2017) further indicated that cryptocurrency exchange platforms are a potential risk that could influence cryptocurrency pricing. For example, Mt. Gox, a Bitcoin exchange platform, saw both the website and trading engine disappear without official comment, leading to a decline in the Bitcoin price.