All Times ET
Keywords: Modified Lagrange regularization method, Log-periodic power law singularity (LPPLS), Bitcoin bubble, Cryptocurrency, Market crash
We adopted the Log-Periodic Power Law Singularity (LPPLS) model for real-time identification and monitoring of Bitcoin bubbles and crashes and proposed the modified Lagrange regularization method to alleviate the impact of potential LPPLS model over-fitting to better estimate bubble start time and market regime change. we estimated the financial bubble peaking in early January 2021 had sprouted from as early as September 2019.We also found that the Bitcoin boom from November 2020 to mid-January 2021 is an endogenous bubble, stemming from the self-reinforcement of cooperative herding and imitative behaviors of market players, while the price spike from mid-January 2021 to mid-April 2021 is likely an exogenous bubble driven by extrinsic events including a series of large-scale acquisitions and adoptions by well-known institutions.