Skip to content

Senior Capstone 2021

Bitcoin Value, Price, and Limitation

Abstract: This paper seeks to analyze Bitcoin pricing using regression models and attempt to identify the basis for appreciation in cryptocurrency. The discussion includes reviewing the past research on the Bitcoin pricing models, Bitcoin mechanisms, and potential market forces underlying them. Next, an evaluation of Bitcoin movements is provided based on data collected and representing the past five years. The statistically significant findings suggest that Bitcoin might have an intrinsic value based on its design and computing power from within its network, as well as a market premium from positive market sentiment. A further assessment provides a quick observation of the impact of 26 events that potentially created a price shock. In concluding, the paper discusses the limitations of Bitcoin, including the high pollution and e-waste problem resulted from the proof of work (PoW) mechanism, scalability problem from small block size cap, and the lack of regulation.

Zhiping is a fourth-year student at Northeastern majoring in Economics and Business. His interest is in financial analysis and investments. His immediate plans are finding a financial analyst job this fall and preparing for graduate school within 2-3 years.