The purpose of this paper is to explore the cryptocurrency Bitcoin through a theoretical and empirical framework. Theoretically, I investigate the fundamental properties of Bitcoin with respect to the Theory of Money and provide evidence that Bitcoin is a new type of asset class and not a traditional fiat currency. Empirically, I evaluate this claim by testing macroeconomic time series indicators and their effects on Bitcoin price. A total of three reduced form Vector Auto Regression (VAR) models in this paper that investigated various interactions including monthly Bitcoin price with respect to monthly macroeconomic indicators, monthly Bitcoin price with respect to monthly Bitcoin supply and demand variables, and daily Bitcoin price with respect to daily Bitcoin supply and demand variables. These VAR models were evaluated using a Granger Wald Causality test and Impulse Response Functions analysis. My research question focused on how a positive one standard deviation shock in a given variable caused the price of Bitcoin to react over a given time period. From the results, macroeconomic variables cause incredible movement in Bitcoin price, yet the causality relationship is inconclusive based on the Granger-Causality tests. Bitcoin supply and demand variables had less of an impact on Bitcoin price, but higher values in the Granger Causality.


Wang, Gang


Business Economics


Bitcoin, Cryptocurrency

Publication Date


Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis



© Copyright 2018 Spencer B. Wood