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No reward—no effort: Will Bitcoin collapse near to the year 2140?

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  • Grobys, Klaus

Abstract

This paper explores whether the overall evolution of Bitcoin log-prices would manifest a log-period power-law singularity (LPPLS) signature, eventually resulting in the arrival of a finite-time singularity. Calibrating the LPPLS model using daily data on Bitcoin covering the 2011—2023 period, this study indeed finds evidence for a strong LPPLS signature suggesting the arrival of a spontaneous singularity in the year 2129. Further striking evidence suggests that Bitcoin will experience what we term a close-to-singularity-condition near to the year 2050—a remarkable coincidence with the recently documented arrival of a finite-time singularity in U.S. equities.

Suggested Citation

  • Grobys, Klaus, 2024. "No reward—no effort: Will Bitcoin collapse near to the year 2140?," Finance Research Letters, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:finlet:v:63:y:2024:i:c:s1544612324003246
    DOI: 10.1016/j.frl.2024.105294
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    References listed on IDEAS

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    1. Nassim Nicholas Taleb, 2021. "Bitcoin, currencies, and fragility," Quantitative Finance, Taylor & Francis Journals, vol. 21(8), pages 1249-1255, August.
    2. Zhang, Qunzhi & Sornette, Didier & Balcilar, Mehmet & Gupta, Rangan & Ozdemir, Zeynel Abidin & Yetkiner, Hakan, 2016. "LPPLS bubble indicators over two centuries of the S&P 500 index," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 458(C), pages 126-139.
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    4. Nassim Nicholas Taleb, 2021. "Bitcoin, Currencies, and Fragility," Papers 2106.14204, arXiv.org, revised Jul 2021.
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    More about this item

    Keywords

    Bitcoin; Bubble; Collapse; Expected value; Log-periodicity; Finite-time singularity;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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