Investigation Into the Relationship Between the Supply and Demand and Price of Ethereum: An ARDL Bounds Test Approach

The purpose of this article is to examine the relationship between supply, demand and price fundamentals of Ethereum. In the paper, daily data covering the period 20.05.2017- 31.01.2019 was used. Hypotheses were explained using the Classical Unit Root and ARDL Test. Respectively, the supply of Ethereum is explained by the “Ethereum Energy Consumption Index” and the demand of Ethereum is explained by “Transaction Fee”. As a control variable, “Hashrate” is included in the model. Hashrate also expresses a technology used. Ethereum price is considered in Ether/USD. First, stationarity of the variables was determined using the Augmented Dickey-Fuller (ADF) test. The long-term dynamics are characterized using the Autoregressive Distributed Lag (ARDL) Bounds Test. As a result of the analysis, it was found that there is a long-term relationship between Ethereum’s supply, demand, price, and Hashrate. Additionally, Ethereum price and Hashrate affect the supply of Ethereum positively in the long-term.

Keywords: ARDL test, Stationary, Cointegration, Ethereum, Supply, Demand, Price

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Investigation Into the Relationship Between the Supply and Demand and Price of Ethereum: An ARDL Bounds Test Approach

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