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Unveiling the Drivers of Bitcoin Volatility: The Impact of Covid-19 and Trump’s Presidency

Rudolfsson, Victor LU and Ludvigsson, Carl (2025) NEKP01 20251
Department of Economics
Abstract
This thesis investigates the factors driving Bitcoin’s volatility over the period 2019 to 2025. A period marked by heightened economic uncertainty, including both the Covid-19 pandemic and the Trump election period. Utilizing GARCH-X (1,1) and EGARCH-X (1,1) models, the paper finds five statistically significant drivers of volatility; VIX, S&P 500, Gold, U.S. dollar index (DXY) and Google search intensity for the word “Bitcoin”. This paper also includes dummy variables to capture the effects of the Covid-19 pandemic and Trump’s election. The results indicate heightened Bitcoin volatility during the Covid-19 period, while the Trump period had a dampened effect on its volatility. These findings suggest that volatility in Bitcoin is highly... (More)
This thesis investigates the factors driving Bitcoin’s volatility over the period 2019 to 2025. A period marked by heightened economic uncertainty, including both the Covid-19 pandemic and the Trump election period. Utilizing GARCH-X (1,1) and EGARCH-X (1,1) models, the paper finds five statistically significant drivers of volatility; VIX, S&P 500, Gold, U.S. dollar index (DXY) and Google search intensity for the word “Bitcoin”. This paper also includes dummy variables to capture the effects of the Covid-19 pandemic and Trump’s election. The results indicate heightened Bitcoin volatility during the Covid-19 period, while the Trump period had a dampened effect on its volatility. These findings suggest that volatility in Bitcoin is highly affected by major economic shocks, highlighting its sensitivity to periods of heightened uncertainty. (Less)
Please use this url to cite or link to this publication:
author
Rudolfsson, Victor LU and Ludvigsson, Carl
supervisor
organization
course
NEKP01 20251
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Bitcoin, Volatility drivers, GARCH, Covid-19, Trump’s presidency
language
English
id
9208940
date added to LUP
2025-09-12 11:17:53
date last changed
2025-09-12 11:17:53
@misc{9208940,
  abstract     = {{This thesis investigates the factors driving Bitcoin’s volatility over the period 2019 to 2025. A period marked by heightened economic uncertainty, including both the Covid-19 pandemic and the Trump election period. Utilizing GARCH-X (1,1) and EGARCH-X (1,1) models, the paper finds five statistically significant drivers of volatility; VIX, S&P 500, Gold, U.S. dollar index (DXY) and Google search intensity for the word “Bitcoin”. This paper also includes dummy variables to capture the effects of the Covid-19 pandemic and Trump’s election. The results indicate heightened Bitcoin volatility during the Covid-19 period, while the Trump period had a dampened effect on its volatility. These findings suggest that volatility in Bitcoin is highly affected by major economic shocks, highlighting its sensitivity to periods of heightened uncertainty.}},
  author       = {{Rudolfsson, Victor and Ludvigsson, Carl}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Unveiling the Drivers of Bitcoin Volatility: The Impact of Covid-19 and Trump’s Presidency}},
  year         = {{2025}},
}