THE RELATİONSHİP BETWEEN BİTCOİN TRADE VOLUME AND INFLATİON UNCERTAİNTY: EVİDENCE FROM TURKEY

Abstract

Even though Bitcoin use has been increasing in emerging markets in recent years, the literature on the determinants of Bitcoin adoption is rather scarce. Turkey has become one of the countries in which cryptocurrency ownership is fairly common. This paper aims to contribute to the literature by examining whether inflation uncertainty and Bitcoin trade volume are cointegrated in Turkey. Inflation uncertainty is proxied by the conditional variance in inflation which is obtained by estimating the EGARCH model of the inflation series. By employing a nonlinear cointegration approach, the paper provides evidence for the first time that Bitcoin trade volume moves together with inflation uncertainty by fluctuating around a long-run equilibrium.