New York Digital Investment Group (NYDIG), a financial services company has quantified the impact of regulation on the global price of Bitcoin (BTC) in a recent study.
Following regulatory developments affecting digital asset taxes, accounting, and payments, as well as determinations on the legitimacy of service providers and the digital assets themselves, NYDIG regularly examined Bitcoin pricing.
The study was restricted to the time period between September 30, 2011, and march 31, 2022, and it focused on the Americas, Europe, China, and Asia, with the exception of China.
The study took into account between 17 regulatory developments in the Americas and 10 in China. With the exception of China, price increases for Bitcoin were observed in absolute terms after a regulatory event, with the prices increasing by over 100% in every instance in a period of 365 days.
Similar trends were also seen in data relating to “average Bitcoin return,” albeit less pronouncedly. 365 days after regulatory events, the price of bitcoin increased in the Americas by 160.4 percent in absolute terms and 32.3 percent in relative ones.
These percentages were 180.1 and 52.0%, respectively, in Europe. However, the statistics were 116.9 percent and -11.2 percent in Asia, excluding China.
China served as the illustration for the rule. The authors noted that the Chinese government steadily implemented limitations on the mining and trade of digital assets, describing regulation in China as “existential.”
They also found that regulation had a negative influence on Bitcoin pricing in China, which served as additional proof of the effects of legislation.
The study’s findings are obvious, as the authors write in their conclusion. The price of Bitcoin benefits from increased regulatory certainty both in absolute terms and relative terms. They then almost quickly toned down their language, writing:
“The implication is that regulatory clarity, while not always perfect, is appreciated by investors. It is worth noting that it is impossible to directly observe the effect of regulation as there are myriad factors impacting price at any given time.”
The impacts of this noise, however, “are partially canceled out” in the authors’ conclusions because of the size of their sample, they are confident.
