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Abstract

Bitcoin has evolved from an online token relegated to the fringes of society into a major player in modern financial markets. Bitcoin annual returns were the highest of any asset over the last decade, and it seems that it will not be returning to the fringe anytime soon. Many investors however are unwilling to invest or include the token into their portfolios and strategies due to the lack of understanding regarding its niche in financial markets. The purpose of this paper is to examine Bitcoin's relationship to real interest rates, gold prices, unemployment rates, and other variables in an attempt to shed light on how this asset correlates with the market at large. This was carried out using two separate multiple linear regression models which indicated statistically significant positive correlations between Bitcoin price and interest rates.

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