Bitwise Chief Investment Officer Matt Hougan reviewed a 43-page report recently published by the International Monetary Fund (IMF) on cross-border movements in Bitcoin. He shared three key takeaways from the report.
The report highlights that countries with limited access to the global economy are significant users of Bitcoin.
Estimated Bitcoin cross-border flows are quite large relative to the GDP of many countries, especially those experiencing relatively small capital flows. This finding suggests that individuals in countries facing capital controls or limited access to the global economy are using Bitcoin as an outlet. This supports the idea that BTC is a tool for economic freedom.
The report also includes a chart comparing cross-border BTC flows with flows into traditional investment products by GDP. The US stands out as an extreme outlier with its low adoption of Bitcoin compared to traditional capital flows. This suggests that the US perspective does not reflect the reality of many other countries, such as Venezuela and Ukraine, which show higher Bitcoin adoption rates.
The IMF report, authored by three researchers, includes a review of relevant academic literature and uses sophisticated on-chain and off-chain techniques to identify BTC capital flows. The IMF's interest in Bitcoin is driven by its rapid growth over the past decade and the growing need for policymakers to understand its impact on the global economy.
The report concludes that Bitcoin makes it easier to bypass capital flow restrictions, a finding consistent with recent studies. According to the report, policy makers aiming to manage capital flows should ensure that capital flow management regulations also cover cryptocurrencies. The report also states that the increase in Bitcoin usage is a “symptom” of imbalances in the traditional economy.
*This is not investment advice.