Bitcoin and Uncertainty - A Comparative Analysis

Abstract

This thesis investigates the impact of uncertainty indicators on Bitcoin returns and compares its performance to gold, a traditional safe haven commodity, and the S&P 500 Index. Utilizing regression analyses, the study examines Bitcoin's responsiveness to measures of uncertainty, including interest rates, the VIX index, expected inflation, and geopolitical risk. Findings reveal Bitcoin's substantial sensitivity to volatility and potential as an alternative investment during periods of heightened uncertainty. The research provides insights for investors seeking to minimize losses through strategic allocation in Bitcoin amidst times of increased financial and geopolitical risk. Additionally, the comparative analysis underscores Bitcoin's unique position relative to traditional assets, highlighting its evolving dynamics as an investment asset.