According to market data provider Kaiko Research, trading volumes between the British pound and the cryptocurrency bitcoin surged to a record high after the sterling fell on Monday, According to commentators; this was probably caused by investors selling their pound quickly to buy the digital asset or to make an arbitrage profit.
The pound fell to a new low against the dollar on Monday after falling the previous Friday in response to the UK government’s announcement of unfunded tax cuts.
According to Kaiko Research, the number of transactions in the bitcoin/sterling trading pair jumped to a new high of 846 million pounds ($920 million) on Monday, up from an average of about 54.1 million pounds per day thus far in 2022.
According to James Butter fill, head of research at cryptocurrency company Coin Shares, the increase was probably caused by traders exchanging pounds for bitcoin.
He said that there was a strong connection between rising bitcoin volume and monetary/political instability.
Butter fill stated that although other currencies’ crypto trading volumes, such as the Russian ruble and the Ukrainian hryvnia, had witnessed increases in the past, he had never observed the bit coin-sterling pair’s volume significantly change.
Data, according to Kaiko research researcher Conor Ryder, reveals that cryptocurrency markets responded to the volatility in fiat currencies after the pound dropped on September 26, he said in email comments, “opportunistic speculators ran to crypto exchanges offering BTC-GBP to profit from any mispricing of bitcoin across the major fiat currencies through arbitrage.
“Bitcoin exchange” Bitfinex reported a “substantial surge” in volume and trading activity for the bit coin-sterling pair on Monday.
Bitcoin exchange the volume and trading activity for the bit coin-sterling pair “significantly increased” on Monday, according to Bitfinex, which, in the words of its experts, “underlined the potential of the biggest cryptocurrency to gain from an apparent fragility in fiat currencies.
Cryptocurrencies are undoubtedly extremely volatile, and the price of bitcoin has dropped significantly thus far in 2022 as investors fled riskier investments due to increasing interest rates.
Bitcoin has lost over 58% of its value this year when compared to the dollar, while the British pound has lost 20%.
On Wednesday, the price of the bitcoin was about $19,515 and it was trading at 17,940 against the British pound. Tuesday saw the cryptocurrency reach a two-week high versus the British pound. ($1 = 0.9195 pound)