In a new paper by the Central Bank of Canada, estimates the effect of Bitcoin ownership on the level of cash holdings of Canadian consumers.  The study results point to the fact that, bitcoin ownership positively correlates with cash holdings even after accounting for selection into ownership via a control function approach. On average, Bitcoin owners hold 83 percent (in 2018) to 95 percent (in 2017) more cash than non-owners.

Focusing on the quantiles of cash holdings, we find that Bitcoin ownership has a highly nonlinear effect. For example, the difference in cash holdings between Bitcoin owners and non-owners in 2017 varies from 63 percent at the 25th quantile of cash to 176 percent at the 95th quantile of cash. The results of this paper provide some evidence to reject the hypothesis that new digital currencies or technologies, such as Bitcoin, will lead to a decline in cash holdings.

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