What drives cryptocurrency market dynamics?

Analysing external variable influence on cryptocurrency prices

Master thesis (2021)

Authors

M. Sachs Technology, Policy and Management

Contributors

Z. Roosenboom-Kwee Economics of Technology and Innovation - TPM (graduation committee member)
Faculty
Technology, Policy and Management, Technology, Policy and Management
Copyright: © 2021 Maxim Sachs
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Published Date

30-08-2021

Language

English

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Faculty

Technology, Policy and Management

Abstract

Since the introduction of Blockchain technologies in Bitcoin (Nakamoto & Bitcoin, 2008), there has been over a decade of innovation and growth. The cryptocurrency markets have formed their own ecosystem and followings. On Wednesday 12 th May, 2021, cryptocurrencies reached their highest total market capitalisation yet, at $ 2.5 trillion (coinmarketcap.com, 2021). This rapid growth in valuation has attracted many new entrepreneurs and investors into the industry. However, the cryptocurrency world comes with its own set of challenges. This research is the first to create a multivariate model of the effects of external variables on cryptocurrency prices. For the first time, the results enable to compare the magnitude and direction of effects from price volatility, macro-economic trends, Github statistics, Google trends score, Twitter sentiment, community size and Internet activity levels. The model proposed in this thesis can help managers, developers and investors alike in understanding external risks to cryptocurrency projects.

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