CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter is concerned with the methods used in collecting, analysing and interpreting the

data for the study. It also explains the population of the study, sampling techniques and sampling

size; model development, method used in recording and techniques used in data analysis.

3.2 Research Design

The design used in this research is ex-post facto, as the study entails the use of time series data

for the periods under study as it allowed for the collection of past documented data. This

provided the basis for the full establishment of the relationship between the variables. Therefore,

the non-survey design is adopted to actualize the research objectives, which aim at to examining

the bitcoin valuation techniques: market value prediction and intrinsic value.

3.3 Population of the Study

Population refers to the totality of all conceivable elements or subjects relating to a particular

phenomenon of interest to the researcher. The subjects or elements are the individual items that

make up the population, which may be observed or physically counted. The population of this

study is the economic data relevant to this study. However, this is restricted to bitcoin nominal

value, real value and volume and market capitalization.

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3.4 Sample Size and Sampling Technique

Filter sampling technique was used through applying criteria, for a data to be part of the sample;

the data should be qualified in terms of the following: it should have been sourced from

statistical bulletin or world bank fact data, there should be no change in the fiscal year during the

period, the required data should be available and the required data should be accessible. The

application of the criteria resulted to the selection of bitcoin nominal value (BTN), bitcoin real

value (BTR) and bitcoin volume (BTV) and market capitalization (MKC) data from the period of

eleven (11) years from 2010 to 2020 as sample size of the study.

3.5 Sources and Method of Data Collection

The study is based on empirical research method. The study used secondary source of data for

the purpose of this study. The data are extracted from published statistical websites and statistical

bulletins covering the period of eleven years (11) years from 2010 – 2020.

3.6 Variable and their Measurement

The study used dependent, and independent variables. The dependent variable is market

capitalization (MKC), while the independent variable is bitcoin valuation proxy by bitcoin

nominal value (BTN), bitcoin real value (BTR) and bitcoin volume (BTV).

3.7 Techniques of Data Analysis

The techniques for the data analysis used in this study; include descriptive statistics, correlation

and regressions in E-view version 10 statistical tool. The descriptive statistics is use to organize

and summarized the data with a view of reducing the cumbersomeness and making it meaningful

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and comprehensive, and correlation is a technique of determining the degree of relationship

between two variables. The main objective of this method of determining correlation is to find

out the extent to which two sets of ranking are similar or dissimilar while regression is a

technique of determining the impact of the independent variable(s) on the dependent variable.

The relationship is expressed as an equation that predicts a response variable from a function of

regressor and parameters.

3.8 Model Specification

This research set out to examining the bitcoin valuation techniques: market value prediction and

intrinsic value (2010-2020). This relationship is designed on a linear regression model assuming

a linear relationship between the variables. The model is given as:

Y = β0 + β1X1 + β2X2 + β3X3 + ut

MKC = β0 + β1BTN1 + β2BTR2 + β3BTV3 + ut

Where:

MKC = Market capitalization

BTN = Bitcoin nominal value

BTR = Bitcoin real value

BTV = Bitcoin volume

β0 = Constant (Intercept).

β1 – β3 = Independent variable coefficients (Slope).

ut = error term