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Bitcoin Cross-Border Flows Overview

About: The International Monetary Fund ("IMF") fosters international financiality stability by offering policy advice, financial assistance, and capacity development to its 190 member countries.

The IMF published a primer on Bitcoin ("BTC") using three complimentary datasets and methodologies, which aim to present stylized facts about BTC's cross-border flows. The overarching takeaway is that BTC cross-border flows respond differently to key global and domestic drivers than traditional capital flows, such as net flows into investment funds and emerging markets.

Click the image below for a link to the paper:

Key Highlights and Takeaways

BTC's International Presence

  • There is widespread geographic usage for cross-border transactions using BTC. The magnitude of inflows is particularly high in some Latin American countries, notably Venezeula and Argentina, with statistically releveant inflows present in a number of African, Asian, and Eastern European countries.

  • Countries with relatively large capital inflows tend to have lower BTC inflows, and vise versa.

BTC's Reaction to Global and Domestic Drivers

  • On-chain BTC flows seem to be negatively correlated with broad dollar appreciation, similar to traditional capital flows.

  • Unlike traditional capital flows, BTC prices react positively to uncertainty; BTC flows were positively correlated to changes in the CBOE Volatility Index ("VIX"), a measure of market expectation of short-term volatility and often referred to as the "fear gauge". This positive response may reflect increased activity via the BTC market as investors move away from risk assets.

  • Bitcoin flows react positively to an increase in crypto sentiment, as measured by the crypto fear and greed index, which captures BTC volatility, market momentum, social media interest, dominance the rest of the crypto market, and Google Trends

Source: International Monetary Fund


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