This academic article explores the relationship between Bitcoin and major fiat currencies from both developed and emerging economies. Using advanced econometric methods — including causality tests and Markov regime-switching regression analysis — the study uncovers how Bitcoin interacts with traditional financial systems under different market conditions.

Key findings reveal a causal link between Bitcoin, the Chinese Yuan, and the Indian Rupee, especially during market downturns. In these "contractionary regimes," the appreciation of these emerging market currencies can positively impact Bitcoin’s value, suggesting investor timing plays a significant role.

Overall, the research sheds light on how Bitcoin’s price dynamics are influenced by global fiat currencies, particularly in times of financial stress.

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