The price of bitcoin, ethereum and other cryptocurrency is determined by the mood of investors rather than any economic indicators, according to a new study.

Daniele Bianchi, an assistant professor of finance at Warwick Business School, found that the price patterns of the 14 largest cryptocurrencies reflect past returns of investors, combined with the hype and emotion experienced as they watch the value climb or fall.

“There is research showing limited similarities between Bitcoin and gold, but looking across the 14 biggest cryptocurrencies the high volatility of their price means that they can hardly be seen as a reliable savings instrument in the short-term, let alone the long or medium term,” said Dr Bianchi, whose working paper on the subject is titled Cryptocurrencies as an Asset Class: An Empirical Assessment.

This behaviour can be attributed to the fact that bitcoin and other cryptocurrencies fall outside the remit of governments or financial institutions. Investing in digital currencies is therefore more similar to buying equity in a high-tech firm rather than a normal currency, the study suggests.

The volatile price of bitcoin reflects core ideas of the study, having swung between $6,500 and $10,000 just within the last six weeks.

Dr Bianchi warned that the current cryptocurrency market is akin to the dot-com bubble between 1997 and 2001 that saw excessive speculation in internet firms on the part of investors, eventually resulting in the collapse of many of the companies.

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“Most of these cryptocurrencies come to existence through unregulated crowd sales similar to IPOs, the so-called Initial Coin Offering,” Dr Bianchi said.