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‘Get ready’ for BTC volatility — 5 things to know in Bitcoin this week

Up or down, it is high time that Bitcoin made a significant move, market participants agree.

Bitcoin (BTC) starts a new week keeping everyone guessing as a tiny trading range stays in play.

A non-volatile weekend continues a familiar status quo for BTC/USD, which remains just above $19,000.

Despite calls for a rally and a run to lower macro lows next, the pair has yet to make a decision on a trajectory — or even signal that a breakout or breakdown is imminent.

After a brief spell of excitement seen on the back of last week’s United States economic data, Bitcoin is thus back at square one — literally, as price action is now exactly where it was at the same time last week.

As the market wonders what it might take to crack the range, Cointelegraph takes a look at potential catalysts in store this week.

Spot price action has traders dreaming of breakout

For Bitcoin traders, it is a case of “almost too quiet” when it comes to the BTC/USD weekly chart.

Having come down significantly in volatile conditions over the first half of 2022, recent months have seen an almost eerie lack of volatility.

Data from Cointelegraph Markets Pro and TradingView proves the point — on one-week timeframes, Bitcoin continues to print candles with almost nobody whatsoever.

Such is the stickiness of the current range that, as Cointelegraph reported, the Bitcoin historical volatility index (BVOL) is at lows only seen a handful of times.

“Equity volatility (VIX) relative to Bitcoin volatility (BVOL) is approaching all-time highs,” William Clemente, co-founder of digital asset research and trading firm Reflexivity Research, added in comments last week:

“This illustrates just how much volatility compression Bitcoin is currently experiencing.”

An accompanying chart neatly captured Bitcoin as a curiously stablecoin-esque pick in the current climate, with Clemente implying that a return to the classic, more volatile paradigm should follow.

The week prior, economist, trader and entrepreneur Alex Krueger additionally noted that an “explosive move” had followed all prior trips to macro lows on BVOL.

He argued that United States macro data missing expectations “would do it” in terms of rekindling volatility, but in the event, the numbers remained just short of the trigger range.

Cryptocurrency research firm Delphi Digital agreed.

“Historically speaking, when the BVOL falls below a value of 25, a large spike in volatility tends to follow shortly thereafter,” it stated in part of Twitter comments.

This week, meanwhile, popular crypto investor and analyst Miles Deutscher told traders to “get ready” while commenting on the Delphi data.

*Bitcoin historical volatility index (BVOL) annotated chart. Source: Delphi Digital/ Twitter*

The question for everyone remained the direction that volatility would take the market in.

For Il Capo of Crypto, the trader who predicted Bitcoin’s descent to $20,000 levels from all-time highs, expectations remained the same.

$21,000 should feature as part of a relief bounce, only to be eclipsed by a fresh dive to multi-year lows for BTC/USD, these potentially coming in at $14,000-$16,000.

“Some shitcoins will experience scam pumps during these days, while $BTC goes to 21k. This could give you the illusion that the bull market is back,” he warned over the weekend:

“My advice: don’t be greedy. Take profits if this happens. Protect your capital.”

*BTC/USD annotated chart. Source: Il Capo of Crypto/ Twitter*

Fresh macro triggers line up for crypto

While little is expected from the Federal Reserve in terms of direct policy changes this week, there is still plenty of firewood for crypto volatility set to be provided by external forces.

In the United States, company earnings will be coming in thick and fast, with tech stocks particularly apt to move markets in the event of results falling wide of expectations.

Reporting firms represent over 20% of the S&P 500, which like other U.S. indexes is showing rare weakness this year.

“In my mind, the odds of a low coming in the next week or two are decently high,” Raoul Pal, founder and CEO of RealVision, predicted overnight alongside an accompanying chart:

“The SPX weekly DeMark hits next week, near the bottom of the channel and the 50% retracement, with RECORD bearish sentiment.”

*S&P 500 futures chart. Source: Raoul Pal/ Twitter*

Charting the week ahead, financial commentary resource the Kobeissi Letter likewise told subscribers to “prepare for more volatility.”

More U.S. data will join earnings this week, it explained, while Fed officials will comment on overall policy.

“The median bear market with a recession dating back to 1929 has fallen 39%,” it wrote about stock market strength in one of the various posts over the weekend:

“Furthermore, the median bear market with a recession lasts 16 months. We are currently only 10 months in and the S&P 500 is down just 28%. History continues to suggest that more pain is ahead of us.”

Beyond stocks, the U.S. dollar index (DXY) was mercifully motionless into the new week, so far avoiding another attack on twenty-year highs seen earlier.

Echoing Il Capo of Crypto’s theory, Michaël van de Poppe, founder and CEO of trading firm Eight, hinted that it could be this week or next that “some relief” enters for risk assets more broadly.

“A crucial area for Bitcoin, as it’s still hovering in the range for more than a month,” he summarized on the day:

“It needs to break $19.4-19.6K clearly. If that happens, volatility can finally kick in. Given the structure of the $DXY and the Yields, I expect this to occur in 1-2 weeks.”

*U.S. dollar index (DXY) 1-day candle chart. Source: TradingView*

RSI breakdown risk echoes 2018

Further out, the picture for Bitcoin becomes murkier, and those divining bearish scenarios from current chart data are busy channeling comparisons to the 2018 bear market bottom.

Among them is popular analyst Matthew Hyland, who even in his characteristic bullish market takes has little to celebrate when it comes to the next few months’ BTC price action.

In a tweet from this weekend, Hyland flagged Bitcoin’s relative strength index (RSI) repeating behavior seen in the build-up to the 2018 floor.

An accompanying chart clearly demonstrated familiar bear market forces in play, adding to suspicions that Q4 2022 could closely mirror the scenes from four years ago.

Trading account Stockmoney Lizards confirmed that it “100% agreed” with the idea, which uses the 3-day chart.

*BTC/USD comparison charts with RSI. Source: Matthew Hyland/ Twitter*

The 2018 RSI breakout structure involved a dive from $5,500 to $3,100 for BTC/USD — or roughly 40%.

“Obviously, we’re still waiting for this huge move to come,” Hyland added in a related video about the idea.

He additionally showed that the classic Bollinger Bands volatility indicator was still predicting an incoming storm, with narrowing bands demanding a breakout of volatility.

*BTC/USD 1-day candle chart (Bitstamp) with Bollinger Bands. Source: TradingView*

Hodlers stay as determined as ever

Taking a look at hodler behavior and it becomes apparent that the resolve of the average long-term holder (LTH) remains steadfast.

The latest data from on-chain analytics firm Glassnode confirms a five-year high in the number of Bitcoin either lost or out of circulation in cold storage.

The “hodled or lost coins” metric put the tally at 7,554,982.124 BTC — or 40% of the current supply — as of Oct. 17, meaning that more BTC is off the market than at any time since late 2017.

*BTC amount of hodled or lost coins chart. Source: Glassnode/ Twitter*

Likewise, distribution is also continuing an accelerating trend visible throughout 2022. The number of wallets with a balance of at least one whole Bitcoin is now at an all-time high of over 908,000.

While increasing overall through the latter half of 2021, the trend has gained noticeable momentum this year, Glassnode shows.

*BTC number of addresses holding 1+ coins chart. Source: Glassnode/ Twitter*

Analyzing lost coins as part of its weekly newsletter, “The Week On-Chain,” Glassnode, meanwhile, concluded that the current bear market has yet to match others in terms of intensity when it comes to hodlers.

“Network profitability has not quite hit the same level of severe financial pain as past cycles, however adjustment for lost and long HODLed coins can explain a reasonable portion of this divergence,” it explained last week.

Nonetheless, when it comes to those used to hodling through bear markets, it appears that there’s little appetite for capitulation from current price levels.

Fear enters its second consecutive month

There seems to be no shaking the fear when it comes to crypto market sentiment.

In a sign which has captured the industry this year, the Crypto Fear & Greed Index has now had sentiment in its “fear” or “extreme fear” for two months straight.

Fear & Greed uses a basket of factors to compute a normalized score for market sentiment, and 2022 has delivered results unlike most years.

Earlier, the Index saw its longest-ever stint in “extreme fear,” a feat which is currently one month away from repeating.

As of Oct. 17, the Index measured 20/100 — around 10 points higher than classic bear market bottoms but a full 14 points higher than this year’s low.

*Crypto Fear & Greed Index (screenshot). Source: Alternative.me*

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin ‘bear trap’ sees BTC price near $20K as daily gains top 9%

Over $320 million in liquidations accompanies a gruelling 24 hours for crypto traders.

Bitcoin (BTC) delivered more surprises on Oct. 14 as the reaction to macro triggers saw a sudden run at $20,000.

*BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView*

Stocks, crypto smoke shorts

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD climbing to one-week highs, gaining almost $2,000 in hours.

After the United States Consumer Price Index (CPI) print for September came in above expectations, an initial crypto rout put bulls on edge, but the pain was short lived.

Bitcoin ultimately ran higher than its pre-CPI levels, following stocks that were described as delivering the “biggest bear trap of 2022.”

“That’s gotta be the biggest bear trap I’ve seen so far,” popular Twitter trading account Stockrocker reacted:

“Even I was starting to feel quite bearish.”

*S&P 500 1-hour candle chart. Source: TradingView*

Bitcoin thus kept volatility — and liquidations — coming as spot price bounced around an established trading range.

Popular Twitter analytics account On-Chain College noted that liquidations in a single hour on the day were the highest on those timeframes in over a month.

Data from monitoring resource Coinglass put total BTC liquidations at $116 million in the 24 hours to the time of writing. Cross-crypto liquidations totaled $327 million.

*Crypto liquidations chart. Source: Coinglass*

While failing to reclaim the $20,000 mark, Bitcoin was succeeding in flipping traders’ outlook to the bullish side.

Analyzing chart behavior stretching back to 2019, Credible Crypto argued that the signals were there for an extended upside breakout.

“Our last two major impulses were both preceded by around 120 days of relatively low-volatility consolidation before they began,” he summarized:

“It’s supposed to be boring- it’s part of the process. The more boring it gets the better it is for the coming expansion.”

*BTC/USD annotated chart. Source: Credible Crypto/ Twitter*

Trader on future bottom: CPI move “isn’t it”

Attention thus focused on whether markets could preserve the status quo at the end of the week.

In a sign of potential trouble brewing, the U.S. dollar index (DXY) began clawing back lost ground on the day in what could yet take the momentum out of the risk asset rally.

Summarizing the situation, popular trader Roman said that while it paid to be “macro bearish,” there was no reason to ignore the signs of what should be a temporary relief rally.

“Yes I am macro bearish but this move down isn’t it,” part of a Twitter thread read:

“There’s bullish divergence on every higher timeframe and the DXY has bear divs. USDT.D rejected resistance as well. Tiny brained investors shorting the bottom yet again.”

*U.S. dollar index (DXY) 1-hour candle chart. Source: TradingView*

BTC price wobbles on US PPI as Bitcoin futures open interest hits peak

Bitcoin-denominated futures open interest hits 660,000 BTC despite volatility remaining comparatively flat.

Bitcoin (BTC) saw flash volatility into the Oct. 12 Wall Street open as United States economic data began to move markets.

Analyst: PPI volatility a taste of things to come

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD dipping abruptly below $19,000 as Producer Price Index numbers came in above expectations.

A hint that inflation is not abating as quickly as the Federal Reserve might expect came with the PPI’s release an hour before the market open, which saw local lows of $18,967.

The losses disappeared as quickly as they came, however, and at the time of writing, Bitcoin had already recovered above $19,000.

“Massive volatility at this number of PPI. At least inflation not acceleration,” Michaël van de Poppe, co-founder and CEO of trading platform Eight, wrote in part of a Twitter reaction.

“But, tomorrow, during CPI, the volatility will be higher. Tonight during FOMC minutes as well.”

Van de Poppe advised traders to stay away from leverage during the upcoming macro events, with CPI, in particular, tipped to provide some characteristic fakeouts both before and after release.

Bitcoin’s trading range nonetheless remained narrow, and for some market participants, there was no need to exploit the comparative small moves on the market.

In his latest update on BTC/USD trading on Oct. 11, popular trader Il Capo of Crypto described the setup as “simple.”

“Price has been ranging between 19k and 20500 for 3 weeks,” he summarized.

“If you flip flop randomly during the range, while losing money unnecessarily, that means you have no patience. Main scenario is exactly the same. 21k first, then new lows (14k–16k).”

A trip to those new macro lows would spell deep trouble for derivatives traders participating in the largest-ever buildup of open interest in Bitcoin futures ever recorded.

According to on-chain analytics resource Glassnode, the tally stood at 660,000 BTC.

“Bitcoin futures open interest at an all time high and realized volatility near all time lows. Quite the combo,” William Clemente, co-founder of digital asset research and trading firm Reflexivity Research, commented.

*Bitcoin futures open interest chart. Source: Glassnode*

DXY steadies but yen bleeds lower

After the open, meanwhile, U.S. equities stemmed losses after initially sinking.

The U.S. dollar index (DXY) continued its latest consolidation phase, lingering near 113.3 after failing to clear 113.5 on the day.

Still more than a full point clear of recent 20-year highs, DXY provided no new headwinds for risk assets.

Dollar strength was nonetheless providing kindling for crises elsewhere, however, as the Japanese yen returned to levels not seen since the 1990s.

Despite the central bank’s efforts to prop up the currency, USD/JPY erased those gains through October, now facing new multidecade records.

“Reacquaint yourself with the concept of ‘intervention half-life,’” financial researcher Nick Bhatia responded.

“We will see it in UK yields, USDJPY Central bank freaks out, intervenes, and arb traders fade it until the central bank is forced to bring more.”

*USD/JPY 1-day candle chart. Source: TradingView*

Bitcoin and gold face headwinds amid strengthening dollar

Bitcoin decoupled with the stock market and saw its correlation with gold rise to a level not seen since last year.

Bitcoin (BTC) and gold are no longer investors’ primary choices as inflation hedges amid the strengthening United States dollar. The current turmoil in financial markets added to the geopolitical tensions has run havoc on the majority of the assets that investors prefer to invest in during times of financial crisis.

Bitcoin has lost nearly 70% of its market cap since the market top last year while gold, which strengthened its position in the first quarter of the year despite the Russia-Ukraine crisis, is currently down by 10% year-to-date.

The negative market condition has forced BTC to shed its correlation with tech stocks, while at the same time, the top cryptocurrency’s correlation with the precious metal has reached levels not seen in over a year.

The correlation between Bitcoin and gold over the past year has largely fluctuated between -0.2 and +0.2. However, the correlation between the two assets reached +0.3 last week, the highest in one year.

*Bitcoin’s correlation with gold Source: Kaiko Research*

A correlation reading of +0.3 is considered slightly positive, while a value of +0.7 is regarded as a strong correlation. Thus, even though the BTC-gold correlation has reached a yearly high, it still has not reached a significant level where the price momentums mimic each other.

Apart from Bitcoin and gold, United States Treasury bonds and other stocks have also faced a similar fate. Experts believe the strengthening dollar added to the ongoing market conditions has forced investors to look beyond safe haven assets.

Karim Dandashy, portfolio manager at digital assets investment platform StableHouse, told Cointelegraph:

“Obviously, it’s not been a great year for Bitcoin. Nor has it for traditional risk-off assets like gold and U.S. [Treasury bonds]. The charts say it all, the dollar has been the winner. This is ironic as investors would seek refuge in yield or growth assets, but the risk of recession and attempted QT have driven investors to hoard dollars.”

Bitcoin might be struggling to keep up with the inflation hedge narrative, however, it is important to note that BTC is still a nascent asset class when compared to others. The top cryptocurrency is still among the best-performing assets over the past five years.

XRP price could rally by 50% based off comments from a former SEC director

XRP investors are hopeful that a potential court victory against the SEC could send the altcoin price at least 50% higher.

XRP is hoping that the token could see a massive price rally in 2022 based off the fingers-crossed assumption that Ripple will win its long-running legal battle against the U.S. Securities and Exchange Commission (SEC).

Hinman documents to save XRP bulls?

On Sept. 29, the district court judge in the case, Judge Analisa Torres, ordered the commission to release the documents penned by William Hinman, the former director of the corporation finance division at the SEC.

Hinman may have written about Ether (ETH), the native token of the Ethereum blockchain, not being a security in the concealed documents, believes Ripple. That is primarily because Hinman had proclaimed the same in his speech at the Yahoo Finance All Markets Summit in June 2018.

#XRPCommunity #SECGov v. #Ripple #XRP 1/4 Some thoughts on the next steps in the quest for the Hinman documents. The SEC has a number of procedural cards they can play to try to further delay complying with the order to produce the Hinman documents.

— James K. Filan 118k (beware of imposters) (@FilanLaw) September 30, 2022

Ripple’s defense could use Hinman’s writing as evidence that its blockchain’s native token, XRP, should not be treated as a security, which is the opposite of what the SEC claimed in the lawsuit filed in December 2020.

XRP has since been ousted from many regulated crypto exchanges, including Coinbase and Bitstamp. As a result, it is now among the only top cryptocurrencies that have neither reclaimed nor established a record high during the 2020–2021 crypto market boom, reflecting caution from investors.

Some might argue, that from the vantage point of technical analysis, XRP price remains undervalued compared to other top-ranking cryptocurrencies. And a Ripple win might change that, given the token rallied 20% in a day after Judge Torres’s order.

$XRP is on a mission to save the markets pic.twitter.com/zxBQLP1iBs

— Teddy (@TeddyCleps) September 30, 2022

Ripple going to go full send mode $XRP pic.twitter.com/276BsCVlSf

— Johnny (@CryptoGodJohn) September 29, 2022

Resistance and confluence

From a technical standpoint, XRP is one breakout away from posting a 50% price rally.

Notably, the token now tests a resistance confluence of one multi-year descending trendline resistance, a flipped support bar and a Fibonacci line — all pivoting near $0.57. A Ripple win could help XRP break decisively above this confluence.

*XRP/USD weekly price chart. Source: TradingView*

Such a breakout could have XRP eye a run-up toward the next Fib line near $0.72, up over 50% from Oct. ‘s price. Conversely, a pullback could crash XRP to its previous support level of $0.31, down 35% from the current price levels.

“$XRP is basically a court case play,” noted independent market analyst DonAlt, adding:

“If they win the whole case $XRP giga pumps. if they lose it’ll be a nice -50% candle. Also, an $XRP loss would make other cryptos more vulnerable to attack, so you better cheer them on.”

Next few weeks are ‘critical’ for stock market and Bitcoin, analyst says

Alessio Rastani, a cryptocurrency analyst and trader, shares his outlook on crypto, stocks and the forex market for the next weeks.

The stock market’s movements in the next few weeks will be critical for determining whether we are heading towards a short-term recession or a long-term one, according to forex trader and crypto analyst Alessio Rastani.

During the October-December 2022 period, the analyst expects to see the S&P rallying. “If that bounces or rally fails and drops back down again, then very likely, we’re entering a long-term recession and something very close to similar to 2008,” said Rastani in the latest Cointelegraph interview.

According to the analyst, such a recession could last until 2024 and would inevitably negatively impact the price of Bitcoin (BTC).

Talking about the latest pound sterling crisis, Rastani opined that its principal cause is the rally of the U.S. dollar, which is putting pressure on most other fiat currencies, including the yen and the euro. However, in Rastani’s view, the U.S. dollar is approaching the top.

“Once we see a clean break, a sustained break, of 111.5 and 110 levels on the dollar index, then I think the top is in for the dollar. And then I’m looking for a multi-month decline in the dollar back to 104 to the 100 level on the dollar index,” he explained.

Check out the full interview on our YouTube channel and don’t forget to subscribe!

Bitcoin price loses $20K as trader warns US dollar ‘not quite topped out’

Bitcoin fails to avoid returning back under $20,000 after local highs prove too much to sustain.

Bitcoin (BTC) crossed under $20,000 after the Sept. 27 Wall Street open as United States equities inched higher.

U.S. dollar has room to run — trader

Data from Cointelegraph Markets Pro and TradingView confirmed the $20,000 mark barely remaining as tentative support on the day.

BTC/USD had managed local highs of $20,344 on Bitstamp overnight, while retracing U.S. dollar strength gave modest relief to risk assets across the board.

The S&P 500 and Nasdaq Composite Index had been up 0.4% and 0.65%, respectively, after two hours’ trading, but subsequently reversed.

At the same time, the U.S. dollar index (DXY) was down 0.15% on the day, back below the 114 mark but still near its highest since mid-2002.

“U.S. open coming up. Green numbers, while Yields & $DXY are correcting,” Michaël van de Poppe, founder and CEO of trading firm Eight, commented.

“Time for Q4 to be good for crypto.”

Popular trader Crypto Tony nonetheless cautioned on assuming that DXY had put in a major top.

“Bad news for the Bitcoin pump, the Dollar has not quite topped out yet, so we are looking for more pumps on the dollar and setbacks on $BTC,” he decided.

“Keep an eye on both of these if you plan on leveraging BTC.”

Binance BTC/USDT volume hits all-time high

With days to go before the monthly close, further BTC price volatility was expected, while traders demanded that October — traditionally a better month than September for crypto return — deliver the goods in 2022.

“Tracking price action over the past decade, Sept. has far and away been the worst performing month for BTC — closing positive only 20% of the time,” popular trading account Crypto Kaleo observed in a thread on Sept. 26.

“Silver lining — Oct. has been one of the best months for BTC — positive 78% of the time w/ a median gain of 28%.”

A close above $20,000 would be just enough for Bitcoin’s first “green” September since 2016.

*BTC/USD monthly returns chart (screenshot). Source: Coinglass*

In a sign of what the monthly close might have in store, meanwhile, major exchange Binance recorded its highest-ever daily trading volume for its BTC/USDT pair, with over 439,000 BTC equivalent changing hands.

*BTC/USDT 1-day candle chart (Binance) with volume. Source: TradingView*

Bitcoin, British Pound trading volume soars 1150% as UK’s currency risks dollar parity

Doom and gloom for some British pound investors is neatly avoided with a Bitcoin flight.

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*

Bitcoin, British pound trading volume soars 1,150% as UK’s currency risks dollar parity

Doom and gloom for some British pound investors is neatly avoided with a Bitcoin flight.

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, who was one of many flagging Bitcoin’s appeal over the pound this week.

U.K. 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 as GBP/USD hit its lowest on record at nearly $1.03.

“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 dollar terms. While data from Cointelegraph Markets Pro and TradingView shows that Bitcoin beats it at 56%, 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, executive chairman and former CEO of MicroStrategy, noted in his own assessment of fiat currency losses on Sept. 26.

According to data from CoinShares head of research James Butterfill, trade volume for the GBP/BTC pair on exchanges Bitstamp and Bitfinex, usually worth a combined $70 million per day, hit a giant $881 million on Sept. 26 — an increase of over 1,150%.

Butterfill argued 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.”

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 the major fiat currencies 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 dollars since 2015.

Is it Bitcoin’s time to shine? British pound drops to all-time low against the dollar

The U.S. dollar has been the clear winner as investors seek shelter in the largest global economy, but could the British pound’s weakness be a positive for Bitcoin.

On Sept. 26, the British pound hit a record low against the U.S. dollar following the announcement of tax cuts and further debt increases to curb the impact of a possible economic recession. The volatility simply reflects investors’ doubts about the government’s capacity to withstand the growing costs of living across the region.

The U.S. dollar has been the clear winner as investors seek shelter in the largest global economy, but the British pound’s weakness could be a net positive for Bitcoin. The GBP, or British pound, is the world’s oldest currency still in use and it has been in continuous use since its inception.

Fiat currencies are a 52-year old experiment

The British pound, as we currently know, started its journey in 1971 after its convertibility with gold or theequivalent was effectively terminated. Since then, the currency issued by the Bank of England has not had a fixed valuation.

Inflation has been the centerpiece of economic debates all throughout 2022 after central banks added liquidity to the markets over the previous two years to stimulate economies. As a result, in August 2022, the United Kingdom saw a 9.9% increase in consumer prices versus the previous year.

On Sept. 22, the government announced an unprecedented tax cut, the highest since 1972, causing the British pound to reach an intraday low of $1.038 versus the U.S. dollar on Sept. 26. Analysts concluded that government bond issuance would increase to pay for the lesser tax, and interest rates would have to be aggressively increased.

While the GBP’s loss of value is shocking, one must analyze exactly how important is the global currencies market, and how relevant is the British pound to cryptocurrencies. The first part is relatively easy to answer, but it depends on whether or bank deposits, savings and certificates of deposits are accounted for. If we stick to the base money definition, exclusively measuring circulating cash and deposits at the central bank, the pound sterling stood at GBP 1.05 trillion in June 2022.

In U.S. dollar terms, the U.K. currency represents $1.11 trillion out of the global $28.2 trillion in fiat base money, or roughly 4%. On the other hand, the euro, the unified currency of the eurozone nations, leads the ranking with $6 trillion, closely followed by the U.S. dollar with $5.5 trillion. Hence, the significance of the GBP remains high, backed by the region’s $3.19 trillion gross domestic product in 2021, the fifth largest in the world.

In October 1990, the British government decided to pair the GBP based on the Deutsche Mark because Germany was the leading economic force in the region. However, the country was forced to withdraw from the pairing in September 1992 after Britain’s lackluster financial performance made the exchange rate unsustainable. As a result, during “Black Wednesday,” the interest rates suddenly increased from 10% to 15%, and the GBP currency devalued by 25% overnight.

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Very few assets can compete with fiat money in terms of relevance. Gold has roughly $6 trillion in value, excluding jewelry and non-financial assets, is a definite contender. The tech giant, Apple, also leads the stock market valuation with a $2.45 trillion capitalization, followed by oil producer Saudi Aramco, which is at $2 trillion.

Estimating the relevance of the British pound on cryptocurrencies is not simple, but according to data from Nomics, out of the global Bitcoin fiat trading, the U.S. dollar is the absolute leader with 89%, followed by 4% from the Japanese yen, 3% for the euro and 2% for the sterling.

Consequently, the direct impact on Bitcoin trading seems relatively small, but the fact that the oldest fiat currency reached an all-time low against the U.S. dollar could be a game-changer for cryptocurrencies.

According to Porkopolis Economics, the average issuance rate of the pound sterling since 1970 has been 11.2% per year. This figure directly compares to Bitcoin’s issuance of 900 coins daily or 1.7% yearly.

Once the general population realizes their savings and investments are being devalued more aggressively by central bank stimulus measures, the benefits of a decentralized form of money could become clear. But, for now, the U.S. dollar has been the clear winner, reaching its highest level in over 20 years compared to other major global fiat currencies.