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Global and local drivers of Bitcoin trading vis-à-vis fiat currencies

Author

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  • Di Casola, Paola
  • Habib, Maurizio Michael
  • Tercero-Lucas, David

Abstract

We analyse global and local drivers of Bitcoin transactions against 45 fiat currencies in the largest peer-to-peer crypto exchanges. Global factors, such as momentum in the crypto-asset market or financial market volatility, do matter for Bitcoin trading. There is evidence of a global crypto cycle driven by speculative motives. Trading across currencies and users around the world moves in tandem with fluctuations in the Bitcoin price. Crypto shocks and global risk shocks are behind this cyclical comovement. Crucially, Bitcoin seems to also offer utility benefits in emerging and developing economies, since trading increases after idiosyncratic, currency-specific shocks that depreciate the currency. Local projections analysis and case studies confirm this important link between exchange rate instability and Bitcoin transactions.

Suggested Citation

  • Di Casola, Paola & Habib, Maurizio Michael & Tercero-Lucas, David, 2025. "Global and local drivers of Bitcoin trading vis-à-vis fiat currencies," Journal of International Money and Finance, Elsevier, vol. 158(C).
    • Handle: RePEc:eee:jimfin:v:158:y:2025:i:c:s0261560625001408
    DOI: 10.1016/j.jimonfin.2025.103405
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    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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