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Does monetary policy fuel bitcoin demand? Event-study evidence from emerging markets

Paul Marmora

Journal of International Financial Markets, Institutions and Money, 2022, vol. 77, issue C

Abstract: Despite mounting central bank concerns over cryptocurrency adoption, there is little evidence that monetary policy compels national currency holders to consider decentralized virtual alternatives. Exploiting cross-country variation in prescheduled announcement timing, I isolate how monetary policy announcements affect local Bitcoin demand using an event-study design on a panel of 26 emerging economies. I find that monetary policy announcements increase both measures of local Bitcoin attention and local Bitcoin trade volume, but only on days when the public is abnormally attentive to inflation. These announcement-induced Bitcoin trading spikes are only significant in countries that are not normally accustomed to inflation risk.

Keywords: Bitcoin; Monetary policy; Emerging economies; Event study; Investor attention (search for similar items in EconPapers)
JEL-codes: C23 E41 E52 G14 G15 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.intfin.2021.101489

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Journal of International Financial Markets, Institutions and Money is currently edited by I. Mathur and C. J. Neely

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