Bitcoin Price Doesn’t Care About Macro News: NY Fed Economists

Bitcoin is statistically independent of all macro news, except consumer price inflation, economists at the New York Fed found


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The Federal Reserve Bank of New York led a study that examined the relationship between bitcoin and macroeconomic data, finding that the two barely have a link.

“The key result is that, unlike other US asset classes, Bitcoin is orthogonal to monetary and macroeconomic news,” economists Gianluca Benigno and Carlo Rosa wrote. 

They did flag that bitcoin seems to be slightly sensitive to consumer price index (CPI) data — a measure of inflation — however its coefficient was only 5%.

“If we restrict the sample to the period 2017-2021, the CPI coefficient is no longer significant for Bitcoin, but it remains significantly different from zero for other assets,” Benigno and Rosa said in the study

“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.”

Bitcoin was the chosen asset for the study because of its popularity and because it is more “accessible and liquid” than other cryptocurrencies, they said. 

The economists analyzed its response to broadly defined macroeconomic data points such as initial jobless claims, industrial production, retail sales, unemployment and news on inflation. Bloomberg consensus forecasts were used to compare market expectations. 

Bitcoin’s low responsiveness to macro news is in “stark contrast” with other assets the economists used for comparison — gold, silver, the S&P 500 and a number of bilateral exchange rates.

“All other traditional assets respond to macroeconomic news with an economically large and significant coefficient,” they wrote.

The economists originally expected bitcoin to respond to monetary policy news as they figured bitcoin is an asset with no intrinsic value, whose current value “depends on the discounted value of its future price.” 

So, changes in current and future real interest rates, powered by macroeconomic events, should impact its desirability as an investment

“Our analysis instead shows that, while other US asset prices respond to both the target and the path of monetary policy news, Bitcoin is unresponsive to unexpected changes in the short-term rate while its reaction to news about the future path of policy is not robust,” they said.

Bitcoin (BTC) last traded around $24,560 as of 11:00 am ET and is down 35% in the last 12 months, but up 50% in the year-to-date period. 

The S&P 500, on the other hand, is down 6.5% over the past year and up 5.2% in 2023 so far.

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