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Beyond the Buzz: A Measured Look at Bitcoin’s Viability as Money

Author

Listed:
  • Essa Hamad Al-Mansouri

    (College of Islamic Studies, Hamad Bin Khalifa University, Qatar Foundation, Doha P.O. Box 34110, Qatar)

  • Ahmet Faruk Aysan

    (College of Islamic Studies, Hamad Bin Khalifa University, Qatar Foundation, Doha P.O. Box 34110, Qatar)

  • Ruslan Nagayev

    (College of Islamic Studies, Hamad Bin Khalifa University, Qatar Foundation, Doha P.O. Box 34110, Qatar)

Abstract

This paper examines Bitcoin’s viability as money through the lens of its risk profile, with a particular focus on its store of value function. We employ a suite of wavelet techniques, including Wavelet Transform (WT), Wavelet Transform Coherence (WTC), Multiple Wavelet Coherence (MWC), and Partial Wavelet Coherence (PWC), to decompose the risk structure of Bitcoin and analyze its relationship with various systematic risk factors. Our dataset spans from 13 August 2015 to 29 June 2024, and includes Bitcoin, major commodities, global and US equities, Shari’ah-compliant equities, Ethereum, and the Secured Overnight Financing Rate (SOFR). We find that Bitcoin’s risk profile is increasingly aligned with traditional financial assets, indicating growing market integration. While Bitcoin exhibits high volatility, a significant portion of this volatility can be attributed to systematic rather than idiosyncratic factors. This suggests that Bitcoin’s risk may be more diversifiable than previously thought. Our findings have important implications for monetary policy and financial regulation, challenging the notion that Bitcoin’s volatility precludes its use as money and suggesting that regulatory approaches should consider Bitcoin’s evolving risk characteristics and increasing integration with broader financial markets.

Suggested Citation

  • Essa Hamad Al-Mansouri & Ahmet Faruk Aysan & Ruslan Nagayev, 2025. "Beyond the Buzz: A Measured Look at Bitcoin’s Viability as Money," JRFM, MDPI, vol. 18(1), pages 1-22, January.
    • Handle: RePEc:gam:jjrfmx:v:18:y:2025:i:1:p:39-:d:1569163
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    References listed on IDEAS

    as
    1. Jia, Boxiang & Shen, Dehua & Zhang, Wei, 2024. "Bitcoin market reactions to large price swings of international stock markets," International Review of Economics & Finance, Elsevier, vol. 90(C), pages 72-88.
    2. Shehzad, Khurram & Bilgili, Faik & Zaman, Umer & Kocak, Emrah & Kuskaya, Sevda, 2021. "Is gold favourable than bitcoin during the COVID-19 outbreak? Comparative analysis through wavelet approach," Resources Policy, Elsevier, vol. 73(C).
    3. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
    4. repec:eme:mfppss:mf-08-2021-0355 is not listed on IDEAS
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