Bitcoin (BTC) will see increased interest from the United Kingdom “very quickly” as fiat currency volatility makes BTC look like a stablecoin.
That was the conclusion from Gabor Gurbacs, strategy adviser at investment giant VanEck, one of many flagging Bitcoin’s appeal over the pound this week.
UK becomes fertile ground for Bitcoin "orange pill"
As the U.S. dollar runs rampant, its strength has come at the expense of trading partner currencies, notably the euro, pound and Japanese yen.
The pound’s disintegration gathered pace this week, however, as GBP/USD hit its lowest on record at nearly $1.03.
With the United Kingdom’s central bank, the Bank of England, avoiding interventions so far, nerves are showing as purchasing power takes a double hit from currency weakness and inflation at forty-year highs.
“The United Kingdom will get orange-pilled very quickly given GBP volatility,” Gurbacs predicted.
“Given that the UK is now outside of the EU bureaucratic apparatus, it will get another chance to become a Bitcoin hub. I think UK leaders will use this opportunity reasonably well.”
The pound was down nearly 25% year-to-date at one point in USD terms. While Bitcoin beats it at 56%, data from Cointelegraph Markets Pro and TradingView shows, the longer the time horizon, the more attractive a BTC hedge becomes.
“Over the past four years the dollar has collapsed -67% gains USD,” Michael Saylor, former CEO of MicroStrategy, noted in his own assessment of fiat currency losses on Sept. 26.BTC/USD vs. GBP/USD chart. Source: TradingView
According to data from CoinShares head of research James Butterfill, trade volume for the GBP/BTC pair on major exchanges Bitstamp and Bitfinex, normally worth a combined $70 million per day, hit a giant $881 million on Sept. 26 — an increase of over 1,150%.
Butterfill argued that this showed that "when a FIAT currency is threatened, investors start to favour Bitcoin."
Reacting, Saifedean Ammous, author of the popular book, "The Bitcoin Standard," called the phenomenon "fascinating."GBP/USD trade volume on Bitstamp, Bitfinex chart. Source: James Butterfill/ Twitter
G20 is "starting to understand" the need for a BTC hedge
Gurbacs, meanwhile, acknowledged that while he “might be too optimistic about the UK,” G20 countries could yet enact a major policy shift vis-a-vis BTC acceptance.
“Like gold, Bitcoin could be a hedge against their own policies. Which is worth a small % allocation and support,” he continued.
“Some are starting to understand this.”
Beyond the pound, data shows that it is the major fiat currencies that are suffering more at the hands of a surging greenback than those of emerging markets (EMs).
“The tables have turned,” Robin Brooks, chief economist at the Institute of International Finance, declared this week.
“Emerging markets like Brazil and Mexico are year-to-date outperforming G10 currencies against the Dollar. This is a big pivot in global markets that's unprecedented. EM monetary policy is these days more orthodox than in advanced economies. Well done EM…”
An accompanying chart from Bloomberg showed the Brazilian real and Mexican peso gaining even on the dollar in 2022.
The pound brought up the rear along with the yen, while the Russian ruble was notably absent, having hit its highest in USD since 2015.Fiat currency returns vs. U.S. dollar as of Sept. 26. Source: Robin Brooks/ Twitter
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