The Impact of Gold and Oil Prices on Bitcoin Price: An Analytical Study

Abstract

This paper investigates how price dynamics of Bitcoin are affected not simply by endogenous factors of the cryptocurrency market, but also by exogenous ones related to the worlds of gold and oil. Empirical results based on statistical analysis (regression modeling, correlation matrix) show a significant positive, along with interesting, link between oil prices and Bitcoin, that reflects the influence of world energy markets, inflation, and liquidity on the value of Bitcoin. In the meantime, gold has a steady but minor effect, which indicates that Bitcoin is slowly integrating into normal stores of value, if it doesn't behave entirely like the shiny metal during times of economic stress. The results underscore the need to stop treating Bitcoin as a separate universe that is detached from the macro models. Predictive modelling calls for a bullish uptrend over 5 years for Bitcoin, with the usual caveat for future estimates. In general, this research adds to our new understanding of Bitcoin as an intermediate asset, both irrational (speculation) and rational (hedge), and motivates further attention on how this digital currency continues to interact with major commodities as it becomes more integrated in the world of global finance.