Federal Reserve Bank studies Bitcoin's resilience to macroeconomic news

Friday 10 February 2023 09:50 CET | News

The US Federal Reserve Bank has published a new paper in which it looks closely at Bitcoin and its lack of response to most macroeconomic news.


The paper authored by Gianluca Benigno and Carlo Rosa investigates the connection between Bitcoin and macroeconomic fundamentals by estimating the impact of macroeconomic news on Bitcoin using an event study with intraday data. The main takeaway is that, unlike other US asset classes, Bitcoin is orthogonal to monetary and macroeconomic news. 

The Federal Reserve Bank of New York compared Bitcoin to other asset classes such as precious metals, and the S&P 500, and eventually concluded that Bitcoin cannot be used as a form of payment at scale, mainly because of its high volatility. 

Representatives from the Federal Reserve Bank regard Bitcoin and other crypto assets more in line with gold and other precious metals rather than the United States dollar. The speculative probability model used by the bank to determine the future probabilities related to Bitcoin value showed that monetary news about the future path of policy has more visible effects on Bitcoin price than those about the current target rate.


The US Federal Reserve Bank has published a new paper in which it looks closely at Bitcoin and how it remains unaffected by most macroeconomic news.


Bitcoin’s reaction to macroeconomic news 

The report also revealed that Bitcoin price reacts with increased volatility before and after the FOMC statements about the country’s interest rates. The Fed compared the reaction of Bitcoin’s price in timeframes of 30 minutes and 1 hour to those of fiat currencies like JPY, EUR, USD, and GBP during macroeconomic news events regarded as high impact. 

Even though the Fed concluded that Bitcoin is unresponsive to both monetary and macroeconomic news, it did note that more study is needed to completely understand the disconnect between Bitcoin and the macroeconomic aspects. 

According to The Paypers’ Crypto Payments and Web 3.0 For Banks, Merchants, and PSPs Report launched in November 2022, In the US, cryptocurrencies are not considered legal tender by the Financial Crimes Enforcement Network (FinCEN) and the Internal Revenue Service (IRS).  

Still, the IRS defines cryptocurrency as ‘a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value’ and has issued tax guidance accordingly. In March 2014, it said that Bitcoin and other cryptos will be taxed as ‘property’ and not currency.

Is Washington turning its back on crypto? 

According to, the current state of the cryptocurrency market coupled with the collapse of FTX has contributed to a general distrust in cryptocurrencies in Washington. To exemplify, the source reveals that Custodia Bank, a crypto-friendly bank, was firmly denied its request to join the Federal Reserve system even though it believed it did everything by the book. 

Furthermore, the Fed also warned every other bank that they need to ask permission before engaging in any crypto activity, and the White House published an administrative roadmap to mitigate the risk of cryptocurrencies, in which it emphasised the administration’s focus on protecting investors and holding bad actors accountable while making sure that cryptocurrencies cannot undermine financial stability.

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Keywords: study, banks, cryptocurrency, digital assets, Bitcoin
Categories: DeFi & Crypto & Web3
Companies: Federal Reserve
Countries: United States
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