Driving Factors Behind the Price of a Decentralised Cryptocurrency - An Internal Look at Network Factors In uencing the Price of Bitcoin

Abstract

This paper researches internal in uences on the price of Bitcoin. By looking at Satoshi Nakamoto's original whitepaper, as well as employing economic theories such as the Law of Diminishing Marginal Utility, Commodity Theory, and network valuation theory Met- calfe's Law, variables are chosen and run through a multiple regression analysis to de- termine the variables in uence on the price of Bitcoin. This paper uses monthly data spanning 6 years from 2015 to 2020. Regression analysis shows that the variables Number of Active Addresses, Di culty Rate and Hash Rate all are positively correlated to the price of Bitcoin, whilst the Relative Availability is negatively correlated to the price of Bitcoin.