2025/11/30 by Hamoon Soleimani, Soleimani, Hamoon · 1 voice
Computer Science · Economics, Econometrics and Finance · #Banking stability, regulation, efficiency #Blockchain Technology Applications and Security #FOS: Economics and business #General Finance (q-fin.GN) #Market Dynamics and Volatility #Pricing of Securities (q-fin.PR) #Statistical Finance (q-fin.ST) #q-fin.GN #q-fin.PR #q-fin.ST
paper · pdf · doi:10.48550/arxiv.2512.07886
openalex publication_date 2025/11/30 · arxiv published 2025/11/30 · arxiv updated 2025/11/30 · openalex created_date 2025/12/11 · openalex updated_date 2026/07/28
Bitcoin operates as a macroeconomic paradox: it combines a strictly predetermined, inelastic monetary issuance schedule with a stochastic, highly elastic demand for scarce block space. This paper empirically validates the Endogenous Constraint Hypothesis, positing that protocol-level throughput limits generate a non-linear negative feedback loop between network friction and base-layer monetary velocity. Using a verified Transaction Cost Index (TCI) derived from Blockchain.com on-chain data and Hansen's (2000) threshold regression, we identify a definitive structural break at the 90th percentile of friction (TCI ~ 1.63). The analysis reveals a bifurcation in network utility: while the network exhibits robust velocity growth of +15.44% during normal regimes, this collapses to +6.06% during shock regimes, yielding a statistically significant Net Utility Contraction of -9.39% (p = 0.012). Crucially, Instrumental Variable (IV) tests utilizing Hashrate Variation as a supply-side instrument fail to detect a significant relationship in a linear specification (p=0.196), confirming that the velocity constraint is strictly a regime-switching phenomenon rather than a continuous linear function. Furthermore, we document a "Crypto Multiplier" inversion: high friction correlates with a +8.03% increase in capital concentration per entity, suggesting that congestion forces a substitution from active velocity to speculative hoarding.