  Recently, the notion of cryptocurrencies has come to the fore of public
interest. These assets that exist only in electronic form, with no underlying
value, offer the owners some protection from tracking or seizure by government
or creditors. We model these assets from the perspective of asset flow
equations developed by Caginalp and Balenovich, and investigate their stability
under various parameters, as classical finance methodology is inapplicable. By
utilizing the concept of liquidity price and analyzing stability of the
resulting system of ordinary differential equations, we obtain conditions under
which the system is linearly stable. We find that trend-based motivations and
additional liquidity arising from an uptrend are destabilizing forces, while
anchoring through value assumed to be fairly recent price history tends to be
stabilizing.
