IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v18y2025i5p259-d1652154.html
   My bibliography  Save this article

Bitcoin vs. the US Dollar: Unveiling Resilience Through Wavelet Analysis of Price Dynamics

Author

Listed:
  • Essa Al-Mansouri

    (College of Islamic Studies, Hamad Bin Khalifa University, Qatar Foundation, Doha P.O. Box 34110, Qatar)

Abstract

This paper investigates Bitcoin’s resilience against the U.S. dollar—widely recognized as the global reserve currency—by applying a multi-method wavelet analysis framework to daily price data of Bitcoin, the USD strength index (DXY), the euro, and other assets ranging from August 2015 to June 2024. Quantitative measures—particularly the Frobenius norm of wavelet coherence and an exponential decay phase-weighting scheme—reveal that Bitcoin’s out-of-phase relationship with the dollar is lower and more sporadic than that of mainstream assets, indicating it is not tightly governed by dollar fluctuations. Even after controlling for the euro’s dominant influence in the DXY, BTC continues to show weaker coupling than mainstream assets—reinforcing the idea that it may serve as a partial hedge against dollar-driven volatility. These results support the hypothesis that Bitcoin may serve as a resilient store of value and hedge against dollar-driven market volatility, placing Bitcoin within the broader debate on global monetary frameworks. As global monetary conditions evolve, the resilience of Bitcoin (BTC) relative to the world’s leading reserve currency—the U.S. dollar—has significant implications for both investors and policymakers.

Suggested Citation

  • Essa Al-Mansouri, 2025. "Bitcoin vs. the US Dollar: Unveiling Resilience Through Wavelet Analysis of Price Dynamics," JRFM, MDPI, vol. 18(5), pages 1-21, May.
    • Handle: RePEc:gam:jjrfmx:v:18:y:2025:i:5:p:259-:d:1652154
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/18/5/259/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/18/5/259/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Laser, Falk Hendrik & Weidner, Jan, 2022. "Currency Compositions of International Reserves and the Euro Crisis," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 136620, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    2. Edib Smolo & Ruslan Nagayev & Rashed Jahangir & Christo S. C. Tarazi, 2024. "Resilience amidst turmoil: a multi-resolution analysis of portfolio diversification in emerging markets during global financial and health crises," Journal of Asset Management, Palgrave Macmillan, vol. 25(1), pages 51-69, February.
    3. Falk Hendrik Laser & Jan Weidner, 2022. "Currency Compositions of International Reserves and the Euro Crisis," Open Economies Review, Springer, vol. 33(5), pages 917-944, November.
    4. Adams, Zeno & Glück, Thorsten, 2015. "Financialization in commodity markets: A passing trend or the new normal?," Journal of Banking & Finance, Elsevier, vol. 60(C), pages 93-111.
    5. Christopher G. Collins & Deepa Dhume Datta & Bastian von Beschwitz, 2019. "Revisions to the Federal Reserve Dollar Indexes," FEDS Notes 2019-01-15, Board of Governors of the Federal Reserve System (U.S.).
    6. Dyhrberg, Anne Haubo, 2016. "Bitcoin, gold and the dollar – A GARCH volatility analysis," Finance Research Letters, Elsevier, vol. 16(C), pages 85-92.
    7. Bastian von Beschwitz & Christopher G. Collins & Deepa Dhume Datta, 2019. "Revisions to the Federal Reserve Dollar Indexes," IFDP Notes 2019-01-15, Board of Governors of the Federal Reserve System (U.S.).
    8. Hail Park & Jong Chil Son, 2022. "Dollarization, inflation and foreign exchange markets: A cross‐country analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 2724-2736, July.
    9. Adams, Zeno & Glueck, Thorsten, 2014. "Financialization in Commodity Markets: A Passing Trend or the New Normal?," Working Papers on Finance 1413, University of St. Gallen, School of Finance, revised Aug 2015.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wen, Fenghua & Tong, Xi & Ren, Xiaohang, 2022. "Gold or Bitcoin, which is the safe haven during the COVID-19 pandemic?," International Review of Financial Analysis, Elsevier, vol. 81(C).
    2. Lucey, Brian M. & Vigne, Samuel A. & Ballester, Laura & Barbopoulos, Leonidas & Brzeszczynski, Janusz & Carchano, Oscar & Dimic, Nebojsa & Fernandez, Viviana & Gogolin, Fabian & González-Urteaga, Ana , 2018. "Future directions in international financial integration research - A crowdsourced perspective," International Review of Financial Analysis, Elsevier, vol. 55(C), pages 35-49.
    3. Seiler, Volker, 2024. "The relationship between Chinese and FOB prices of rare earth elements – Evidence in the time and frequency domain," The Quarterly Review of Economics and Finance, Elsevier, vol. 95(C), pages 160-179.
    4. Kearney, Fearghal & Shang, Han Lin & Sheenan, Lisa, 2019. "Implied volatility surface predictability: The case of commodity markets," Journal of Banking & Finance, Elsevier, vol. 108(C).
    5. Czudaj Robert L., 2020. "The role of uncertainty on agricultural futures markets momentum trading and volatility," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 24(3), pages 1-39, June.
    6. Evrim Mandacı, Pınar & Cagli, Efe Çaglar & Taşkın, Dilvin, 2020. "Dynamic connectedness and portfolio strategies: Energy and metal markets," Resources Policy, Elsevier, vol. 68(C).
    7. Lyócsa, Štefan & Molnár, Peter & Todorova, Neda, 2017. "Volatility forecasting of non-ferrous metal futures: Covariances, covariates or combinations?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 51(C), pages 228-247.
    8. Baris Kocaarslan & Ugur Soytas, 2025. "How do the reserve currency and uncertainties in major markets affect the uncertainty of oil prices over time?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(2), pages 2016-2041, April.
    9. Cheng, Sheng & Cao, Yan, 2019. "On the relation between global food and crude oil prices: An empirical investigation in a nonlinear framework," Energy Economics, Elsevier, vol. 81(C), pages 422-432.
    10. Loretta Mastroeni & Alessandro Mazzoccoli & Greta Quaresima & Pierluigi Vellucci, 2021. "Wavelet analysis and energy-based measures for oil-food price relationship as a footprint of financialisation effect," Papers 2104.11891, arXiv.org, revised Mar 2022.
    11. Kang, Sanghoon & Hernandez, Jose Arreola & Sadorsky, Perry & McIver, Ronald, 2021. "Frequency spillovers, connectedness, and the hedging effectiveness of oil and gold for US sector ETFs," Energy Economics, Elsevier, vol. 99(C).
    12. Duc Khuong Nguyen & Thomas Walther, 2020. "Modeling and forecasting commodity market volatility with long‐term economic and financial variables," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 39(2), pages 126-142, March.
    13. Luca J. Liebi, 2020. "The effect of ETFs on financial markets: a literature review," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 34(2), pages 165-178, June.
    14. Bianchi, Robert J. & Fan, John Hua & Todorova, Neda, 2020. "Financialization and de-financialization of commodity futures: A quantile regression approach," International Review of Financial Analysis, Elsevier, vol. 68(C).
    15. M. Bel'en Arouxet & Aurelio F. Bariviera & Ver'onica Pastor & Victoria Vampa, 2023. "Time-frequency co-movements between commodities and economic policy uncertainty across different crises," Papers 2304.05517, arXiv.org.
    16. Dejan Živkov & Jovan Njegiæ & Mirela Momèiloviæ, 2018. "Bidirectional spillover effect between Russian stock index and the selected commodities," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 36(1), pages 29-53.
    17. Guhathakurta, Kousik & Dash, Saumya Ranjan & Maitra, Debasish, 2020. "Period specific volatility spillover based connectedness between oil and other commodity prices and their portfolio implications," Energy Economics, Elsevier, vol. 85(C).
    18. Yang Liu & Tongshuai Qiao & Liyan Han, 2022. "Does clean energy matter? Revisiting the spillovers between energy and foreign exchange markets," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 42(11), pages 2068-2083, November.
    19. Delphine H. Lautier, Franck Raynaud, and Michel A. Robe, 2019. "Shock Propagation Across the Futures Term Structure: Evidence from Crude Oil Prices," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    20. Hang Shao & Zhou Li, 2025. "The predictive effect of heterogeneous investor behavior on commodity pricing," Palgrave Communications, Palgrave Macmillan, vol. 12(1), pages 1-12, December.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:18:y:2025:i:5:p:259-:d:1652154. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.