Bitcoins as an investment or speculative vehicle? A first look

Abstract

We use Bitcoin and S&P 500 Index daily return data to examine relative volatility using detrended ratios. We then model Bitcoin market returns with selected economic variables to study the drivers of Bitcoin market returns. We report strong evidence to suggest that Bitcoin volatility is internally (buyer and seller) driven leading to the conclusion that the Bitcoin market is highly speculative at present.

Keywords:

• Bitcoin
• speculation
• investment
• detrended ratio
• exponential trend

JEL Classification:

• G11
• G14