The British pound plunged to an all-time low 1.035 against the US dollar this week and other several fiat currencies has suffered collapse worldwide, which made investors turn their attention on digital assets/cryptocurrencies.
They traded their pounds and euros for Bitcoin and Ethereum, which contributed to the Crypto market to get stronger.
According to Messari, the largest numbers of investors are coming from United Kingdom and EU. They have exchanged their currencies into Bitcoin and Ethereum.
“As these UK and EU individuals see the value of their currency collapsing, they are effectively selling the pound and euro for bitcoin. If this was just a trade to capture volatility, we would have seen similar spikes in May 2021 and certainly March 2020.”
Bitcoin is still the most bought digital asset.
On September 26, the trading volume of bitcoin and British pounds on the exchanges has hit a record high of over USD 880 million, far above the previous historical record of $70 million per day.
Between the 22nd and 27th of September the daily volume of Bitcoin bought in EUR reaching up to 50,000. The same figure is recorded for Bitcoin purchases in pounds Sterling.
Ethereum however, has been traded much less than Bitcoin.
“In Ethereum, individuals from the UK and EU have shifted their funds into ETH, but not to the same extent as Bitcoin. Ethereum volumes rose against the GBP, but these highs were similar to many on uneventful trading days in late 2020 and early 2021.” – Messari.
The IMF warned the UK government on Wednesday that a sweeping fiscal package could undermine the nation’s efforts to beat back inflation.
“Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy,” MMF stated
The Bank of England has already hiked its base rate to 2.25% from near-zero at the start of 2022, in a bid to slow price increases by encouraging saving over spending and raising borrowing costs. The US Dollar Index has gained 18% this year due to US Federal Reserve’s series of aggressive interest-rate hikes, which has lifted the federal funds rate from virtually nothing to a range 3.25% and spurred some investors to swap pounds for dollars in pursuit of better returns, also numbers of investors from United Kingdom have exchanged their currencies into Bitcoin and Ethereum.
