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Bitcoin Price More Correlated to FTX Developments than Macro Events: Research

While inflation has an effect on Bitcoin’s price, analysts were perplexed by the cryptocurrency’s resistance to other macroeconomic factors.

According to analysis, the collapse of FTX and related occurrences had a greater impact on the price of Bitcoin during Q4 than macroeconomic factors such as rate hikes.

According to Messari research analysts Sami Kassab and Chris Collar’s “State of Bitcoin Q4 2022” study, the collapse of the exchange resulted in a 25% reduction in the price of Bitcoin.

The analysis noted that changes in the federal funds rate had a far lesser impact on Bitcoin prices, even after 75 and 50 basis point increases.

It also stated that active wallets climbed by 2% over the previous quarter as Bitcoin was transferred from centralized exchanges to self-custodial wallets during the period.

A study paper released earlier this week by the Federal Reserve Bank of New York reached a similar result.

The report published on February 8 examined the relationships between macroeconomic news and the price of Bitcoin, concluding that inflation was the only variable with a substantial impact on the price of Bitcoin.

The authors of the article, research analysts Gianluca Benigo and Carlo Rosa, gathered data from January 2017 to December 2022 to examine the influence of macroeconomic news on various asset classes.

Many macroeconomic news categories were considered in the study, including inflation, the real economy, monetary policy news, and forward-looking indicators.

The authors were taken aback by their findings, concluding:

“The key result is that, unlike other U.S. asset classes, Bitcoin is orthogonal to monetary and macroeconomic news. This disconnect is puzzling as unexpected changes in discount rates should, in principle, affect the price of Bitcoin even when interpreting Bitcoin as a purely speculative asset.”

Despite the Federal Reserve of the United States continuing to hike interest rates at an unprecedented rate, Bitcoin has had a great start to 2023, gaining by just under a third from $16,557 to $21,888, according to Yahoo Finance.

 

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