The Bitcoin cycles and the effect of the war in Ukraine

Abstract

In this work we investigate the cycles of bitcoin based on its price and volume. To do so, we define the cycles’ starting point based on the local minimum before its ascending phase, and the ending point being the local minimum after its descending phase. This methodological framework can be derived among other disciplines, by solar physics in the high-speed solar wind streams identification. In this way, we can argue at which point of a probable cycle we currently are, and characterize the Bitcoin’s performance, i.e., smooth, or extreme volatility. We also analyze the impact of the war in Ukraine on the price and volume of Bitcoin. We apply a two-stage event-analysis methodology, to explore whether Bitcoin price and volume were affected by the Ukraine war event, and to investigate the magnitude of this effect. The results indicate that the cycles differ in their number based on price and volume, and we currently are in a smooth period not profound if another cycle has already started. Moreover, based on the results, the war in Ukraine significantly affected Bitcoin volume, but not its price.