BITCOIN VALUE ANALYSIS BASED ON CROSS-CORRELATIONS

SWOT Analysis of Bitcoin The SWOT analysis of bitcoin combines results obtained from existing research, [2-4,8,14,15], with results obtained from the cross-correlation analysis presented above. * Strengths: Worldwide use; increasing number of users; lack of brokers; low transaction costs; transactions speed; ultimately constant amount of bitcoins in system (anti-inflation mechanism); regulation by market processes; not possible to be regulated by large holders; protection of personal data of all participants. * Weaknesses: Highly dependent on participants' trust in system; susceptible to speculative bubbles, as that of 2014; no material form; high value fluctuations; susceptible to user errors; decreasing reward for users providing computing power to the system ("miners"); mining using CPU and GPU unprofitable. * Opportunities: Strong cross-correlations between the numbers of bitcoin transactions and transaction fees and the bitcoin price; very good cross-correlation of bitcoin price with gold and crude oil price; correlation of bitcoin price with contemporary stock market indices like NASDAQ, DAX and S&P500. * Threats: Exchange rate is impossible to forecast with using standard methods such as the Holt-Winters method or the Indicators method; bitcoin value shows no signs of periodicity; number of users and transactions directly affect bitcoin price. Attempts to regulate the price of bitcoin have all failed. [...]it was proved to be hard to predict bitcoin price in future periods using standard models for forecasting, [16].