Bitcoin Macroeconomic Model and Its Potential as a Macro Asset
Bitcoin has evolved from an experimental peer-to-peer digital currency into a globally recognized financial asset with increasing macroeconomic significance.
Bitcoin has evolved from an experimental peer-to-peer digital currency into a globally recognized financial asset with increasing macroeconomic significance. As institutional adoption grows and economic conditions shift, Bitcoin is being evaluated alongside traditional macro assets—such as gold, sovereign bonds, and reserve currencies. This article employs a rigorous macroeconomic framework grounded in the Quantity Theory of Money (QTM) to analyze Bitcoin’s potential as a leading macro asset. By examining its supply constraints, velocity trends, and macroeconomic interactions, I provide insights that are both empirically grounded and actionable for investors and policymakers.
Bitcoin and the Quantity Theory of Money
The classical Quantity Theory of Money is given by the equation:
MV = PQ
where M is the money supply, V is the velocity of money, P is the price level, and Q represents real expenditures. To adapt …