The effect of inflation expectations and other factors on Bitcoin pricing

Abstract

The purpose of this study is to further contribute to the understanding of Bitcoin pricing. We use inflation expectations as our variable of interest and control for what has shown significance in the past and discuss its potential implications. We look at the effect on both the global Bitcoin price and its local price within the U.S. where we use two specific research questions with separate models. We find that inflation expectations have a significant negative effect on the global Bitcoin price, but inflation had an significant positive effect. On the U.S. local market we observe an insignificant effect of inflation expectations on the Bitcoin price.