A Regression Model to Analyze the Impact of Macroeconomic Indicators on Bitcoin, Gold and the S&P500 Index
Authors:-Mayukh Ghosh
Abstract-This study examines the impact of key macroeconomic indicators—Consumer Price Index for All Urban Consumers (CPI-U) and Federal Reserve Rate (Fed Rate)—on the performance of Bitcoin (BTC), Gold (XAUUSD), and the S&P500. Through regression analysis, the research provides a comparative perspective on traditional and emerging asset classes (Wu, 2022). The findings indicate that inflation plays a dominant role in influencing asset prices, with the strongest effects observed in equities and Gold. Bitcoin, despite its perception as a digital hedge, exhibits moderate sensitivity to inflation alongside high volatility driven by speculative and external factors. The Fed Rate has a weaker influence on all three assets, particularly Bitcoin, suggesting that monetary policy alone does not dictate cryptocurrency price movements (Pinchuk, 2021). The study underscores the importance of inflation in shaping investment strategies, especially for traditional assets, while highlighting Bitcoin’s speculative nature. The research also introduces a model framework that can be adapted to assess various asset classes against different macroeconomic indicators. Future work should explore advanced analytical techniques and a broader set of variables to enhance market insights.
