What Are the Potential Factors That Will Affect the Value of Bitcoin in the U.S.?

Abstract

As a representation of Cryptocurrency, Bitcoin may have the potential to become a reliable currency due to its characteristics of decentralization and built-in scarcity. The evolution of Bitcoin shows some similarities with gold, that is an inflation hedge with a stable price. The purpose of this study was to determine what factors might affect the value of Bitcoin, which cause it eventually circulate with a stabilized price and become a future gold-like commodity under a macroeconomic scope. This paper conducted a generalized linear regression analysis of the Bitcoin price and gold price on the inflation rate, interest rate, and current account by using RStudio. Based on the United States annual data, this paper found evidence that the U.S. inflation rate, U.S. interest rate, and U.S. current account did not have significant effects on the gold price. However, the Bitcoin price was significantly affected by the U.S. inflation rate and U.S. interest rate. This implied that Bitcoin was not as stable as gold at current stage, but one possible speculation is that Bitcoin has the potential to counter inflation in the future.