Title: Cryptocurrency pricing determining factors

Authors: Steven Msomi; Andile Nyandeni

Addresses: School of Accounting, Economics and Finance, University of KwaZulu-Natal, Private Bag X54001, Durban, South Africa ' School of Accounting, Economics and Finance, University of KwaZulu-Natal, Private Bag X54001, Durban, South Africa

Abstract: Cryptocurrencies have emerged as a popular investment option in recent years. This paper aims to identify and analyse the factors that determine the pricing of cryptocurrencies. The existing problem is the lack of a comprehensive framework for understanding cryptocurrency pricing. The study is necessary to help investors make informed decisions about investing in cryptocurrencies. To examine determinants of cryptocurrency prices, the study used five cryptocurrencies and employs the GMM techniques. The study used multiple variables (coin prices; coins issued per day; difficulty and market capitalisation) to test how they can determine cryptocurrency prices. Findings showed that coins that uses higher hash rate, which has higher difficulty, higher market capitalisation and has lower number of coins that are mined on daily basis, is likely to have its pricing improved over short to medium terms. Overall, this research work provides valuable insights into the factors that determine the pricing of cryptocurrencies.

Keywords: cryptocurrencies; digital currency; Bitcoin; pricing factors; generalised method of moment; GMM; dynamic panel; hash rate; coins issued; market capitalisation; short-run dynamics; long-run dynamics.

DOI: 10.1504/IJBC.2023.131649

International Journal of Blockchains and Cryptocurrencies, 2023 Vol.4 No.1, pp.80 - 104

Received: 13 Dec 2022
Accepted: 02 Mar 2023
Published online: 21 Jun 2023 *

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