A surprisingly neutral take from IMF researchers on Bitcoin in a recent paper. A 43-page paper, A Primer on Bitcoin Cross-Border Flows: Measurement and Drivers

Twitter user @Matt_Hougan gives the following summary:

Takeaway #1: Countries that have limited access to the broader global economy are big users of bitcoin on a relative basis.

The paper notes: “The magnitudes of the estimated Bitcoin cross-border flows are sizeable with respect to several countries’ GDP, especially in those which experience relatively small capital flows.”

This finding is repeated throughout the paper. It makes sense: People in countries facing either capital controls or limited access to the global economy are using bitcoin as a release valve.

People have called bitcoin a tool for economic freedom. The data in this paper provides a proof point that it's being used exactly for that.

Takeaway #2: The US is an extreme outlier in its low adoption of bitcoin vs. traditional capital flows. Our perspective, therefore, does not reflect everyone’s reality.

As proof, the paper includes a great chart comparing cross-border bitcoin flows vs. flows into traditional investment products by GDP. (Note: The chart labels traditional flows “EPFR” because it gathers the data from EPFR Global.) You can see that the US has the most extreme reading in its dominance by traditional funds. On the other end of the spectrum are countries like Venezuela and Ukraine.

Takeaway #3: The IMF is paying attention to bitcoin.

This is a serious paper. It's written by three IMF researchers, includes a survey of relevant academic literature, and takes a sophisticated approach to using using on- and off-chain techniques to determine bitcoin capital flows.

The IMF is doing this research because bitcoin "has grown rapidly over the past decade" and policymakers increasingly need to understand its impact on the global economy.

Consider this piece from the conclusion:

“These findings are in line with a recent body of work suggesting that Bitcoin facilitates the circumvention of capital flow restrictions (Graf von Luckner et al., 2024, 2023; Hu et al., 2021). As highlighted by IMF (2023a), policymakers aiming to manage capital flows should ensure that capital flow management regulations cover crypto assets.”

They also note that rising bitcoin use is a "symptom" of imbalances in the traditional economy.

The world is waking up to bitcoin.