The relationship between Bitcoin and exchange rates

Bitcoin is a cryptocurrency introduced to the world through a paper published in online forums by an individual or group named Satoshi Nakamoto. Since 2009, it has become the subject of numerous academic studies over the years. The first part of the paper mentions the concept of money, the types of money and the functions of money, gives a general explanation of the concept of foreign exchange and provides an overview of the emergence of Bitcoin, its technological infrastructure and its role in the financial markets. The main objective of this study is to investigate the relationship between Bitcoin and selected exchange rates, as Bitcoin's influence and users have increased in recent years. The study will help to better understand the factors affecting the price of Bitcoin. While examining the possible relationship between Bitcoin and selected exchange rates, firstly, the Phillips-Perron unit root test was applied, followed by LM and White tests for autocorrelation and variance. Finally, the relationship between BTC, DXY and EUR was analyzed using the VAR Granger causality test. No significant causality relationship between BTC, DXY and EUR was found as a result of the analysis. As expected, a causal relationship was found between DXY and EUR. In line with all these results, the findings obtained from the study will help researchers, and investors in their studies and investments.