Price Bubble,Influencing Factors Of Cryptocurrency Ethereum

Being the second-largest digital currency by market value,Ethereum is the hottest new cryptocurrency and has experienced a rapid growth in price accompanied by huge volatility,which has brought plenty of controversies about the price bubble in the media but surprisingly not in the academic literature.As an "application currency" with clear usage scenarios and industry applications from the beginning of the design,Ethereum itself has unique intrinsic value.On the other hand,the nearly 50-fold increase in half a year has raised doubts about the price bubble of Ethereum.To meet this gap,we conduct an econometric investigation of the existence of bubbles in the Ethereum market based on GSADF method proposed by Phillips et al(2015),a recently developed technique which is robust in detecting bubbles.Then we extent Ensemble Empirical Mode Decomposition to Ethereum price analysis,to study the formation mechanism affecting the price of Ethereum.Finally,we attempt to use an EEMD-based event analysis method to study the impact of "94 supervision" event on Ethereum price.It is found that over the period 2015-2017,Ethereum market experienced a number of periodic price bubbles,among which the longest and most serious price bubbles occurred from April to July in 2017,lasted 72 days.By decomposing the time series into a small number of independent and concretely implicational intrinsic modes based on scale separation,we got three price series with different time ranges and frequencies: short term fluctuations caused by normal supply-demand disequilibrium,the effect of a shock of a significant event such as "The DAO" and "94 regulation",and a long term trend which depends on its network effect.The "94 regulation" event has had a negative impact on the price of Ethereum price,exacerbating the short-term price volatility.However the impact is not permanent in the long run.Finally,by analyzing the domestic and foreign regulatory policy,this paper also proposes the construction of digital currency laws and regulations,the construction of regulatory system and the policy,suggestions on digital currency market access and process supervision.