An increase in the VIX is associated with higher Chainalysis inflows and outflows. This significant, positive response may reflect increased activity via the Bitcoin market as investors move away from risk assets.
We contribute to this debate by providing cross-country panel evidence that off-chain cross-border outflows are positively correlated with a Bitcoin parallel premium which we interpret as a broader proxy for exchange rate pressures, reflecting macroeconomic imbalances.
It is worth noting that the distribution of Bitcoin cross-border flows is skewed to the right with the Seychelles registering the largest Chainalysis inflows of 2.5 percent of GDP followed by Venezuela with 0.8 percent of GDP and Moldova with 0.7 percent of GDP on average over 2019-2022. Likewise, LocalBitcoins inflows amounted to 0.8 percent of GDP in Venezuela, followed by 0.0005 percent of GDP in Nigeria and 0.00002 percent of GDP in the Central African Republic on average over 2017–2022.
Per the IMF: