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Abstract

This study examines the impact of Bitcoin and other cryptocurrency price fluctuations on key indicators of public finance. From a classification perspective, the research is applied in nature and employs a quasi-experimental, ex post facto methodology. To evaluate the magnitude and effects of shocks on public finance variables, the ARCH-GARCH model was utilized. Prior to this analysis, the variables were subjected to descriptive statistics, and the research hypotheses were tested using regression methods. The results confirmed that all variables were stationary. However, multicollinearity analysis revealed a collinearity issue between the inflation rate and gross domestic product (GDP), prompting the construction of two separate models to address this. Diagnostic tests indicated that neither autocorrelation nor non-normality of residuals posed any problems for either model, thereby affirming the robustness of the regression outcomes. The findings indicated that investor sentiment, government expenditure, and financial leverage significantly influenced cryptocurrency returns at the 5% level (p < 0.05). In contrast, GDP and firm size did not demonstrate statistically significant effects within this threshold. At a 95% confidence level, investor sentiment was shown to exert a direct influence on returns, suggesting that variations in emotionally driven investor behavior are closely tied to shifts in cryptocurrency market performance‎.

Keywords: Bitcoin, Cryptocurrencies, Public finance, Validation