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Have cryptocurrencies arrived in the system of fiat currencies? An appraisal based on monetary policy uncertainty
(Elsevier Ltd, 2025) Dimpfl, Thomas; Cagli, Efe
This paper examines the relationship between Bitcoin and other cryptocurrencies and monetary policy uncertainty (MPU). Bitcoin was introduced in 2008 as a decentralized digital currency, free from government control, to offer an alternative to traditional fiat currencies. Given its independence from central banks and, thus, monetary policies, Bitcoin is often considered a hedge against economic instability and uncertain monetary environments. Understanding if and how Bitcoin and other cryptocurrencies react to monetary policy uncertainty allows us to evaluate how integrated cryptocurrencies are into the fiat currency monetary system. To this end, this study empirically investigates the predictive power of MPU regarding cryptocurrency prices and volatility. It shows that by and large, the returns and the volatility of cryptocurrencies are independent from MPU which indicates that cryptocurrencies are still special and not a part of the fiat system.