Author(s) :

Gyumin Gam.

Volume/Issue :

Abstract :

Bitcoin has emerged as a major financial asset, characterized by its distinctive price movements. Thus, many studies have attempted to explore which market and non-market factors may influence volatility and returns, and to understand the nature of Bitcoin as an asset class. In particular, while many market factors, such as trading volume or cryptocurrency-related events, have been extensively explored, limited research has examined whether policy uncertainties that significantly influence real assets also affect digital assets, including Bitcoin. To answer the question, this study employs unexpected tariff announcements made during the second term of the Trump Administration in 2025 as a source of policy uncertainty and tests whether such uncertainty influences Bitcoin’s volatility and returns. This study uses t-tests and regression analysis using daily Bitcoin price data and an event-study framework focusing on tariff announcements. Three different time windows (same day, 1-day, and 3-day) before and after tariff events are used to test volatility fluctuations, while the regression analysis controls for market conditions using VIX (stock market volatility), Gold (gold price volatility), and EPU (Economic Policy Uncertainty). The results show that, in principle, tariff announcements do not significantly affect Bitcoin volatility or returns. However, Bitcoin volatility is largely driven by its own persistence, as lagged volatility significantly predicts future volatility. These effects are also evident for specific types of tariff announcements, such as those related to China and technology. Overall, the findings suggest that Bitcoin is not significantly affected by tradespecific uncertainty but rather by internal market dynamics. This study contributes by revealing the nature of Bitcoin price movement and its connection to economic policy uncertainties.