Bitcoin's Economic Relationships: Insights from a 10-Year Correlation Study
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This study examines the correlation of the price of Bitcoin to eight other key market indicators for the period January 2014 to July 2024. The study's objectives were to determine which indicators had the highest correlation to the price of bitcoin and whether the correlation changed over this period. If there was a change in correlation over this time, the study will attempt to determine the causation of the change. The nine key economic indicators reviewed for correlation to Bitcoin price are (1) the price of gold, (2) Consumer Confidence Index (CCI), (3) US dollar, (4) NYSE Composite Index, (5) NASDAQ Composite Index, (6) Nikkei 255 Index, (7) Hang Seng Index, and (8) the FTSE index.
The conclusion of the paper regarding the price of Bitcoin during our study period is that:
- There was a strong positive correlation with stock exchange indices that were increasing during the period analyzed.
- A positive relationship also existed with the price of gold over the entire study period; however, it was statistically lower during the 5-year sub-periods analyzed.
- There was no statistically justified relationship between the price of Bitcoin and the CCI, US Dollar Index or any of the stock indices that had declined during the study period.
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