Macroeconomic Determinants of Bitcoin Prices: An Empirical Investigation Using Ordinary Least Squares Regression
DOI:
https://doi.org/10.54938/ijemdss.2026.05.4.806Keywords:
Bitcoin, Macroeconomic Factors, OLS Regression, Foreign Direct Investment, Inflation HedgeAbstract
This study aims to determine the correlation between Bitcoin (BTC), Gross Domestic Product (GDP), Foreign Direct Investment (FDI), and Consumer Price Index (CPI) with descriptive and correlational statistics and Ordinary Least Squares (OLS) regression analysis from Jan 1, 2020 to Dec30, 2025. The descriptive analysis showed a significant price volatility of the Bitcoin compared to relatively stable changes of the GDP, FDI and CPI. The findings of correlation showed that there was weak positive correlation between Bitcoin and GDP and CPI respectively as well as there was moderate negative correlation between Bitcoin and FDI. In addition, the independent variables were interrelated positively with no evidence of multicollinearity, thus allowing them to be included in the regression model. The results of OLS regression indicated all explanatory variables are significant in explaining the Bitcoin prices. The positive relationship between GDP and CPI and Bitcoin indicates that economic growth and inflation could further boost investor interest in digital assets, potentially enhancing Bitcoin's inflation hedge function. By contrast, FDI had a marked negative effect, suggesting that the capital of foreign investors is being shifted towards more productive investments because of the increased opportunities for foreign investment. The model showed good explanatory power (R-squared = 0.771) and was highly significant (F-statistic > 0.05), and therefore reliable. The results underscore the susceptibility of Bitcoin to macroeconomic factors and offer valuable insights for investors, policymakers, and researchers in cryptocurrency markets.
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