Researcher ORCID Identifier

0009-0001-7937-2186

Graduation Year

2025

Date of Submission

4-2025

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Ben Gillen

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2025 Kirby S Baynes

Abstract

This thesis examines whether Bitcoin is a beneficial asset in a diversified, mean-variance optimized portfolio and whether its portfolio weights can be reliably predicted using macroeconomic variables. Using data from December 2013 to February 2025, the analysis applies rolling-window portfolio optimization and OLS regressions with Newey-West standard errors to test the relationship between Bitcoin allocations and a set of macroeconomic indicators. Results show that Bitcoin receives non-zero weights across portfolios and that its optimal allocation is sensitive to variables such as changes in the Credit Spread and Yield Curve. These variables were statistically significant in several models and produced meaningful changes in Bitcoin weights when applied to real-world portfolio scenarios. While short-term models produced weaker signals, medium-term windows revealed stronger and more stable relationships. The findings suggest that macroeconomic conditions play a role in Bitcoin’s portfolio value and that forward-looking allocation strategies can benefit by being guided by economic signals.

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