Publication Type
Working Paper
Version
publishedVersion
Publication Date
2-2022
Abstract
This paper uncovers an overlooked motivation of Bitcoin investment: investors hold Bitcoin as an asset on which government authorities have limited influence. Consistent with this motivation, we document a flight-to-Bitcoin (FTB) phenomenon whereby local demand for Bitcoin increases with local economic policy uncertainties and Bitcoin ownership shifts from centralized exchanges to decentralized wallets amid such turbulence. FTB is driven by investors’ lack of confidence in government as FTB is stronger in countries where the confidence in government is low and corruption incidents surge. Finally, a comparison with safe-haven assets further differentiates FTB from flight-to-safety.
Keywords
Cryptocurrency, Bitcoin, Capital controls, Economics policy uncertainty, Foreign exchange
Discipline
Finance and Financial Management | Technology and Innovation
Research Areas
Finance
First Page
1
Last Page
90
Identifier
10.2139/ssrn.3278469
Publisher
SSRN
Citation
YU, Yang and ZHANG, Jinyuan.
Flight to Bitcoin. (2022). 1-90.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/7437
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.2139/ssrn.3278469