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Polygence Scholar2024
Rushil Jaiswal's profile

Rushil Jaiswal

Class of 2025

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  • "A Comparative Analysis of the effects of liquidity on the change in price of Bitcoin" with mentor Adi (Mar. 17, 2024)

Rushil's Symposium Presentation

Project Portfolio

A Comparative Analysis of the effects of liquidity on the change in price of Bitcoin

Started Sept. 29, 2023

Abstract or project description

This paper delves into the intricate relationship between liquidity indicators and the price dynamics of Bitcoin, a prominent cryptocurrency. Liquidity, which is a fundamental aspect of financial markets, profoundly influences market stability and efficiency. Leveraging statistical analysis and AI modeling techniques, my study explores various liquidity metrics—including trading volume, bid-ask spread, order book depth, volatility, number of transactions, bid and ask sums as separate indicators, and market depth—to assess their impact on the price of Bitcoin. The findings offer valuable insights into the factors driving Bitcoin price movements and shed light on the role of liquidity in cryptocurrency markets. Through correlation analysis and R-squared score comparisons, my study evaluates the significance of individual liquidity factors and their relationships with Bitcoin prices. There are various steps which I took to meticulously sift through the data and properly put it onto a single dataframe made it easier to create graphs and understand the correlation but there were also various limitations which are later discussed. The unexpected outcomes challenge conventional assumptions, highlighting the complexity of cryptocurrency markets and the limitations of relying solely on liquidity metrics to predict price movements. My research not only contributes to advancing our understanding of liquidity and price discovery in cryptocurrency markets but also underscores the need for future studies to explore alternative factors and mechanisms shaping cryptocurrency prices. By embracing the unexpected findings and continuously refining analytical approaches, researchers along with myself can navigate the evolving landscape of cryptocurrency trading, ultimately enhancing market efficiency and informing regulatory decisions.