Bitcoin is showing signs of recovery, registering a 5.3% price bomb over the past week to trade at $20,129, according to CoinGecko tracking as of this writing.
Here’s a look at what’s been happening over the past few days:
- The British pound fell to an all-time low of $1.03 against the USD on September 26, 2022
- BTC/GBP trading volume on Bitfinex and Bitstamp grew by 47,000 BTC
- Bitcoin is proving that it can benefit from the fragility of fiat currencies
The maiden cryptocurrency is not only performing well in terms of its price but also its trading volume.
Indeed, as the British pound hit a new all-time low against the US dollar last September 26 at $1.03, BTC/GBP trading pairs on various exchanges became very active, raising over 47,000 BTC.
Bitfinex and Bitstamp, two crypto exchanges where the pair appears, saw a phenomenal jump in trading volume that same day, reaching $881 million.
Source: Arcane Research
According to CoinShares head of research James Butterfill, this value is 12 times greater than the two companies’ daily average of $70 million over the past two years.
Bitcoin as a hedge or speculative interest
This latest surge in Bitcoin trading volume has sparked discussions about whether there is now substantial hedging demand for the crypto or whether the asset is now the subject of speculative interest.
In the face of the impressive trading volumes recorded on Bitstamp and Bitfinex following the collapse of the British pound, analysts remain divided on what this entails.
Some believe this could be the result of a significant number of investors looking to the largest cryptocurrency by market capitalization to hedge against the declines in value experienced by fiat currencies.
Others, however, have reason to believe that this could be caused by traders seeking to profit from the volatility currently being experienced in the space.
A Bitfinex analyst has shared that trading volume growth of this magnitude shows how Bitcoin can benefit from “the apparent fragility of fiat currencies.”
It’s almost the same thing that happened with the Ukrainian hryvnia and the Russian ruble earlier this year.
Collapse of the British pound
At the center of all this is the sharp fall in the British pound, which lost 7% of its value against the USD last month.
UK Prime Minister Liz Truss’ proposal to increase her government’s borrowing to pay for tax cuts appears to have spooked investors.
They (investors) believe that this move could increase the country’s inflation rate, which is almost 10%.
The proposal sparked market reactions in the UK, as the government’s five-year bond rose by a full percentage point since Thursday.
By bond market standards, even a 1% increase is considered a huge move.
BTCGBP pair now trading at 17,649 pounds on the daily chart | Source: TradingView.com Featured image from Daily Express, Chart: TradingView.com