Exploration of bubble properties in cryptocurrencies : a hybrid-study with quantitative models for crash estimation supplemented with industry experts
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- Master Thesis 
We employ Supremum Augmented Dickey-Fuller (SADF), the General Supremum Augmented Dickey-Fuller (GSADF) tests and a Log Periodic Power Law (LPPL) test to Cryptocurrency Index (CRIX) price data to evaluate cryptocurrencies as a financial bubble. The tests display bubble tendencies during 2017 and into 2018. Current research within bubble analysis has not been successfully implemented for cryptocurrency price data. Our hybridapproach with interviews supplementing the quantitative analysis reflects better the factors that determine whether or not cryptocurrencies can be labeled a bubble. The greatest challenge to determining if cryptocurrencies are in a bubble relates to the fundamental value and the, currently, inadequate estimation method for fundamental value. After assessing cryptocurrencies as money, we see that this analysis does not align cryptocurrencies as a large scale payment system. The definition and characteristics of money are complementary, and it is likely that cryptocurrencies can satisfy these terms better in the future and make up a bigger part of the financial world in the long term. However, anonymity and limited acceptability make cryptocurrencies more likely to function as a niche payment system in the near future. Furthermore, while some cryptocurrencies are superior to fiat money with respect to aspects such as transaction speed and cost, other areas seem underdeveloped. We present arguments for and against a bubble and while the arguments against a bubble are stronger and easier to defend, the arguments for a bubble prevents such a conclusion. The future development of cryptocurrencies is uncertain, resulting in predictions being proportionally inaccurate. Despite, we present our conclusion as an addition to the debate regarding cryptocurrencies being in a bubble or not.