Deciphering Cryptocurrency Pricing

Professor Andrew Urquhart, a Finance and Financial Technology expert at Birmingham Business School, explores the complexities of pricing cryptocurrencies like Bitcoin and Ethereum. Traditional market theories, such as the Fama-French factors, have been adapted to analyze cryptocurrency returns. Research by Liu, Tsyvinski, and Wu identifies key pricing factors like market return, size, and momentum in over 1,800 cryptocurrencies. Bhambhwani, Korniotis, and Delikouras delve into blockchain-based factors like computing power and network size to explain cryptocurrency returns. Additionally, Sakkas and Urquhart introduce 13 factors based on blockchain data, highlighting the importance of network distribution in pricing cryptocurrencies. The study suggests that cryptocurrencies share similarities with equity markets in terms of pricing. By leveraging blockchain data, investors can gain valuable insights for predicting the future value of cryptocurrencies. The research underscores the significance of incorporating blockchain information in understanding cryptocurrency pricing dynamics. Read more AI-generated news on: https://app.chaingpt.org/news