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Is There a Bitcoin–Macro Disconnect?

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Abstract

Cryptocurrencies’ market capitalization has grown rapidly in recent years. This blog post analyzes the role of macro factors as possible drivers of cryptocurrency prices. We take a high-frequency perspective, and we focus on Bitcoin since its market capitalization dwarfs that of all other cryptocurrencies combined. The key finding is that, unlike other asset classes, Bitcoin has not responded significantly to U.S. macro and monetary policy news. This disconnect is puzzling, as unexpected changes in discount rates should, in principle, affect the price of Bitcoin.

Suggested Citation

  • Gianluca Benigno & Carlo Rosa, 2023. "Is There a Bitcoin–Macro Disconnect?," Liberty Street Economics 20230208, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:95609
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    File URL: https://libertystreeteconomics.newyorkfed.org/2023/02/is-there-a-bitcoin-macro-disconnect/
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    More about this item

    Keywords

    cryptocurrency; Bitcoin; macro news; bubbles;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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