Is Bitcoin Price Driven by Macro-financial Factors and Liquidity? A Global Consumer Survey Empirical Study

This research aims to utilize macro-financial and liquidity elements as the factors that may affect the price of Bitcoin as the largest cryptocurrency in terms of market capitalization. The macro financial factors analyzed in this study were foreign exchange, stock market index, interest rates, and gold, while liquidity ratio is the internal factor. This study applied a fixed-effect model (FEM) and Generalized Method of Moments (GMM) on gathered weekly data from 1 January 2017 to 29 December 2019 from 18 countries with the total of 2,826 observations. The analysis revealed that US Dollar amplifies Bitcoin trading; an increase in interest rate will decrease investors' intention to invest in Bitcoin as a speculative asset, and gold could replace Bitcoin as a substitute asset. Moreover, Bitcoin was found to be highly liquid, which attracts many investors, while the stock market index proved to be insignificant.