Trading volumes between the British pound and the cryptocurrency Bitcoin hit a new high after the fall in the value of the pound on Monday, suggesting investors are scrambling to dump sterling for the digital asset or profit from arbitrage, according to analysts.
According to Kaiko Research, the volume of Bitcoin-pound swap transactions on eight major exchanges around the world hit a record high of 846 million pounds ($920 million) on Monday, compared with an average of around 54.1 million pounds per day in 2022.
James Butterfill, head of research at cryptocurrency firm CoinShares, said the rise was most likely caused by traders swapping pounds for Bitcoin.
According to Conor Ryder, research analyst at Kaiko, the data indicate that cryptocurrency markets were reacting to price fluctuations in fiat currencies. When the pound fell on September 26, opportunistic investors rushed to crypto exchanges offering BTC-GBP to try to capitalize on any mispricing of Bitcoin in the major fiat currencies through arbitrage.
Bitfinex, the cryptocurrency exchange, also reported a sharp rise in the volume and trading activity of Bitcoin pound swaps, outlining the possibility that Bitcoin could benefit from an evident fragility in fiat currencies.
The sources for this piece include an article in Reuters.