This website is evolving. Subscribe and come back often to stay up to date with DSF grants and opportunities.

The evolving liaisons between the transaction networks of Bitcoin and its price dynamics

July 8, 2019

Cryptocurrencies are distributed systems that allow exchanges of native tokens among participants, or the exchange of such tokens for fiat currencies in markets external to these public ledgers. The availability of their complete historical bookkeeping opens up the possibility of understanding the relationship between aggregated users' behaviour and the cryptocurrency pricing in exchange markets. This paper analyses the properties of the transaction network of Bitcoin. We consider four different representations of it, over a period of nine years since the Bitcoin creation and involving 16 million users and 283 million transactions. By analysing these networks, we show the existence of causal relationships between Bitcoin price movements and changes of its transaction network topology. Our results reveal the interplay between structural quantities, indicative of the collective behaviour of Bitcoin users, and price movements, showing that, during price drops, the system is characterised by a larger heterogeneity of nodes activity.

Alexandre Bovet

University of Zurich

Carlo Campajola

University College London & DLT Science Foundation

Francesco Mottes

Harvard University

Valerio Restocchi

University of Edinburgh

Nicolò Vallarano

University of Zurich

Tiziano Squartini

IMT School for Advanced Studies Lucca

Claudio J. Tessone

University of Zurich

Download Files