| With the population of cryptocurrency,the Initial Coin Offering(ICO)has also developed rapidly,while the prevalence of speculation and fraud has brought huge risks to the financial market.Under the action of specially governing Internet finance,the Chinese government started to supervise ICO,clearly determining that ICO was illegal and the domestic virtual currency trading platform required closing,and it was strictly forbidden to conduct trading cryptocurrency through the platform centrally.This paper explored the impact of the ICO ban on the price of cryptocurrency by using bitcoin as a representative to discuss the rationality and effect of policy,which has reference significance for other countries to reduce the speculative bubble of cryptocurrency.This paper explained the cryptocurrency and the policies adopted by governments all over the world in terms of bitcoin,and introduced the development of ICO in China and the evolution of Chinese policies.In theory,the price determination mechanism of bitcoin was analyzed through the theory of money supply and demand equilibrium.At the same time,the transaction matching model was used to explore the path and impact mechanism of Chinese ICO prohibition policy on the price of bitcoin.Then,considering of further empirical research,we selected bitcoin supply variables,trading demand variables,investment speculative demand variables and introduced a policy dummy variable and adopted valid sample data from Blockchain whose length of time is March 9,2017 to February 28,2019.The empirical study was conducted using the event study and the vector error correction model(VECM).Finally,based on the empirical conclusions,we proposed relevant suggestions for investors and governments to prevent the risk of cryptocurrency market.Through the above theoretical and empirical research,we get the following conclusions: First,the price of bitcoin is mainly determined by the supply and demand;Second,policy factors will affect the price of bitcoin by affecting the demand of bitcoin;Third,the implementation of policy banning Chinese ICO has reduced the demand of bitcoin to a certain degree,resulting in decreasing the price of bitcoin to a certain extent after the implementation of the policy.Fourth,the policy of banning ICO issued by the Chinese government has significantly reduced the price of bitcoin,and the intensity of the impact to the price of bitcoin is weakened by the time after the policy is announced;Fifth,the implementation of the Chinese policy of banning ICO has a significant negative impact on the price of bitcoin in both the long-term and short-term.In summary,the introduction of Chinese policy of banning ICO effectively decreases the demand for bitcoin,which led to a downward trend in the price of bitcoin.Based on the research conclusions,the paper holds the opinion that the Chinese policy of banning ICO makes a significant effect on reducing the price bubble in the bitcoin market.And the implementation of the policy is reasonable and effective,which has certain reference significance for other countries to prevent the risk of the bitcoin market. |
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