Bitcoin Unstable? Check Out the British Pound

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In what appears to be a stark role reversal, Bitcoin is now becoming less volatile money than Britain’s national currency.  

  • According to data provided by Bloomberg, the 30-day volatility of the British pound against the U.S. dollar has soared over the past month. 
  • Meanwhile, Bitcoin’s volatility has declined substantially since June, and again since the start of October. This has brought each currency’s volatility to a roughly equal point.

    A cash tray holding British pound banknotes and coins in a shop in Barking, UK, on Tuesday, Sept. 13, 2022. As the UK enters a period of public mourning after the death of Queen Elizabeth II, data releases are likely to show a temporary reprieve in inflation and a jump in wage growth.
    BTC Volatility vs. GBP Volatility. Source: Bloomberg
  • Bitcoin went down as one of the best-performing assets in the previous quarter – simply by staying relatively flat while stocks and commodities continued to fall. 
  • The pound experienced turbulent volatility at the end of September, almost declining to parity with the U.S. dollar. At the same time, trading volume for the BTC / GBP trading pair soared – an emerging trend among collapsing currencies
  • Global bond markets are also showing heightened volatility against Bitcoin, despite the former’s reputation for safety and dependability, and the latter’s reputation as a risk asset. 
  • In Britain’s case, the Bank of England has now returned to temporary quantitative easing to curb instability in its bond market, which nearly caused a “Lehman moment” in September. 
  • Many central banks – including former Fed chair Ben Bernanke – have previously denied that Bitcoin could constitute a form of money, largely due to being too volatile. 
  • Sweden’s central bank presented a similar argument in May: “The price of Bitcoin has had a high degree of volatility and is thus a relatively poor preserver,” it explained over Twitter. 
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