Bitcoin is showing signs of recovery, recording a 5.3% price pump for the past week to trade at $20,129, according to tracking from CoinGecko as of this writing.
Here’s a quick look of what has transpired in the past few days:
- British Pound fell to an all-time low value of $1.03 against USD on September 26, 2022
- BTC/GBP trading volume in Bitfinex and Bitstamp grew by 47,000 BTC
- Bitcoin is showing it can benefit from fragility of fiat currencies
The maiden cryptocurrency is not only performing well in terms of its price, but also with its trading volume.
In fact, as the British pound hit a new all-time low value against the U.S. dollar last September 26 at $1.03, BTC/GBP trading pairs across various exchanges became very active, climbing by more than 47,000 BTC.
Bitfinex and Bitstamp, two crypto exchanges where the pair is listed, observed a phenomenal jump in trading volume on that same day, which reached $881 million.
Source: Arcane Research
According to CoinShares Research Head James Butterfill, that value is 12 times bigger than the $70 million daily average of the two firms for the past two years.
Bitcoin As Hedge Or Subject Of Speculative Interest
In the face of impressive trading volumes recorded on Bitstamp and Bitfinex following the collapse of the British Pound, analysts remain divided as to what this implies.
Some believe that this could be the result of significant number of investors now going for the largest cryptocurrency by market capitalization in order to protect themselves from value dips experienced by fiat currencies.
Others, however, have reasons to believe that this could be caused by traders who are aiming to gain profit from the volatility being experienced in the space right now.
An analyst from Bitfinex have shared that trading volume growth of this magnitude shows how Bitcoin can benefit from “apparent fragility in fiat currencies.”
It is almost the same to what happened with the Ukrainian hryvnia and Russian ruble earlier this year.
The British Pound Collapse
At the center of all of this is the steep fall of the British pound, losing 7% of its value against the USD last month.
It would appear that UK Prime Minister Liz Truss’s proposal for their government’s increased borrowing in order to settle tax cuts struck fear among investors.
They (investors) believe that such move might increase the country’s inflation rate, which is nearly 10%.
The proposal triggered market reactions in UK, as the government’s five-year bond increased by a full percentage since Thursday.
By bond market standards, even just a 1% increase is considered to be an enormous move.
BTCGBP pair now trading at 17,649 pounds on the daily chart | Source: TradingView.com Featured image from Daily Express, Chart: TradingView.com