For instance, m.blog.naver.com Chinese authorities ordered Beijing-based cryptocurrency exchanges to cease trading and stop registering new users (Bitcoin Price History, 2018). However, the price exceeded USD 5,000 for the first time on October 11th 2017, USD 10,000 on November 28th 2017, and USD 20,000 on December 18th 2017; that is, it tripled its price in just two months, reaching records never seen before and exceeding all predictions. However, the then-President Rafael Correa ordered to stop the bitcoin operations and confiscate the circulation of bitcoins and assets in this virtual currency. The money supply (M1) in the Ecuadorian financial system consists of (1) monetary species in circulation (currency in circulation), (2) fractional currency, (3) electronic money, and (4) demand deposits. Dogecoin’s popularity reached new heights when tech mogul Elon Musk publicly supported the digital currency, frequently sharing his enthusiasm on social media. The popularity of bitcoin increased quickly due to the massive media coverage, attracting new users interested in this novel cryptocurrency who bought bitcoin and pushed its value to the top. It is a thing that will become mainstream on earth financial market soon, and the ones who invest earlier as earlier adopters of the amazing innovative technologies will be on the list of newest millionaires in the arriving years and beyond.
The BCE (2018) reported that citizens, who have digital money in their virtual accounts, have three options to manage it. Long before other transfer options became available, it had proven to be a safe bet. The trend analysis is divided into two parts. The price of USD 2,720.53 was reached on August 1st 2017, after Japan recognized bitcoin as a legal medium of payment and the bitcoin code was divided into two parts to create a competing cryptocurrency called bitcoin cash. The trend analysis includes the series of the main global cryptocurrencies shown in table 1, with the exception of the virtual currency called Zcash (ZEC) because its dataset was formed for 490 observations, and it is only available from October 27th 2016 to the present. Graphically, it is possible to better appreciate the trend of the series if the plot is less loaded, besides the analyzed indexes are quoted in different currencies (USD, EUR, and GBP).
Ecuador introduced bitcoin and other digital currencies in July 2014 as a part of the reform of the country’s monetary and financial laws. The Central Bank of Ecuador (BCE) does not recognize bitcoin as a medium of payment, which is stipulated in the Monetary and Financial Organic Code, article No. 94 (Asamblea Nacional del Ecuador 2014). Nonetheless, in 2014, the BCE presented its own digital currency, called Dinero Electrónico, and it is pegged one-to-one to the US dollar (the official currency of Ecuador). The evolution of M1 showed a significant increase of USD 18,695.32 million to USD 22,634.80 million from 2014 to 2016, respectively. Dash or darkcoin experimented an average close price of USD 147.57. The close price range of this cryptocurrency is USD 1.00 (minimum price on September 08th 2015) to USD 1,433.41 (maximum price on December 20th 2017). The virtual currency denominated Ripple, whose average close price is USD 0.17, evidenced its lower price on November 08th 2015 (USD 0.00) and its highest value was achieved on January 7th 2018 (USD 2.78). Finally, the Monero cryptocurrency showed its best close price performance on December 20th 2017 (USD 467.50), while its worst close price (USD 0.36) was on November 22nd 2015. Figure 3 displays the evolution of bitcoin and the most important world cryptocurrencies.
For example, at the one-week horizon, the average return of the top tercile is 8.01% per week with a t-statistic of 4.30, while the average return of the bottom tercile is only 1.10% per week with a t-statistic of 0.92. The time-series momentum results are valid both in sample and out of sample.
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