The Federal Reserve Bank of New York said on Feb. report Bitcoin is similar to a precious metal like gold, but warns that it cannot replace the US dollar because of its volatility.
Using a quantitative methodology known as principal component analysis, the researchers analyzed the intraday changes in the money market forward rate for bitcoin at 30-minute and 1-hour intervals before and after the FOMC’s scheduled announcement. I checked the price of
The 31-page report, authored by Gianluca Benigno and Carlo Rosa, echoes statements made by Fed Chairman Jerome Powell in 2021, arguing that: […] They are not specifically used as a means of payment as they are an asset for speculation. It’s basically a replacement for gold instead of the dollar. ”
The new report builds on Powell’s analysis, which hypothesizes that Bitcoin will function agnostic to macroeconomic news.
“The main result is that Bitcoin is orthogonal to all macro news except CPI. In stark contrast to the exchange rate), all other traditional assets respond to macroeconomic news with large and economically significant factors.”
Reiterating longstanding beliefs within some regulators that bitcoin is a “speculative asset,” he added that price action tends to follow financial news about the future of monetary policy, such as FOMC statements on interest rates and inflation. rice field. It seems to have baffled the researchers.
For example, an unexpected spike in U.S. inflation could raise the cost of producing exports and make that country’s products less attractive on global markets. According to researchers, this could cause the country’s currency to fall in value, which should theoretically correlate with a surge in Bitcoin’s value.
Only the evidence was not conclusive.
However, if the Federal Reserve takes steps to combat inflation by raising short-term interest rates, this could lead to an appreciation of the U.S. dollar, temporarily boosting cryptocurrency prices.
The Federal Reserve has set Bitcoin’s price reaction to 30 minutes and 1 hour compared to major fiat currencies such as the Japanese Yen (JPY), Euro (EUR), US Dollar (USD) and British Pound (GBP). analyzed over time intervals. Important macroeconomic news events.
Interestingly, the Federal Reserve has found that Bitcoin is immune to financial or macroeconomic news. We acknowledged the need for further research to understand the disconnect between
Ultimately, we found that “Bitcoin does not respond to both financial and macroeconomic news. In particular, the result of Bitcoin’s unresponsiveness to financial news is puzzling. It calls into question the role of discount rates in Bitcoin pricing. “