Flight to Bitcoin

90 Pages Posted: 7 Nov 2018 Last revised: 11 Feb 2022

See all articles by Gloria Yang Yu

Gloria Yang Yu

Singapore Management University - Lee Kong Chian School of Business

Jinyuan Zhang

UCLA Anderson School of Management

Date Written: February 10, 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

JEL Classification: D40, D84, G12, G14

Suggested Citation

Yu, Gloria Yang and Zhang, Jinyuan, Flight to Bitcoin (February 10, 2022). Available at SSRN: https://ssrn.com/abstract=3278469 or http://dx.doi.org/10.2139/ssrn.3278469

Gloria Yang Yu (Contact Author)

Singapore Management University - Lee Kong Chian School of Business ( email )

50 Stamford Road
Singapore178899
Singapore

Jinyuan Zhang

UCLA Anderson School of Management ( email )

Los Angeles, CA
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
815
Abstract Views
3,665
Rank
57,620
PlumX Metrics