Bitcoin-Sterling trading volume hits new record high

After sterling dropped on Monday, trading volumes between the British pound and cryptocurrencies spiked to a new record high, according to market data firm Kaiko Research, which analysts said was likely a rush by investors to dump their sterling for the digital asset or profit from arbitrage.

The pound fell to a record low against the dollar on Monday after the UK government announced unfunded tax cuts.

The volume of transactions in the bitcoin-sterling trading pair across eight major exchanges went to a new record high of 846 million pounds $920 million on Monday, compared to the average of 54.1 million pounds a day in 2022, according to Kaiko Research.

James Butterfill, head of research at CoinShares, said the surge was likely due to traders swapping sterling for digital currency.

He said that there is a correlation between bitcoin volume growth and political monetary instability.

Butterfill said that he had never seen such big moves in the bitcoin-sterling pair's volume, and that spikes have previously occurred in other currencies' trading volumes, such as the Russian ruble and Ukrainian hryvnia.

Conor Ryder, research analyst at Kaiko, said the data showed that cryptocurrencies markets responded to the volatility in fiat currencies. He said when sterling crashed on September 26, opportunistic investors rushed to the exchanges offering BTC-GBP to try and profit via arbitrage from any mispricing ofbitcoin across the major fiat currencies.

Bitfinex said on Monday that it saw a spike in volume and trading activity for the bitcoins-sterling pair, which Bitfinex analysts said underlined the potential of the biggest coin to benefit from an apparent fragility in fiat currencies. In 2022, the price of cryptocurrencies has fallen sharply as rising interest rates have prompted investors to ditch riskier assets.

The British pound is down 20 per cent against the dollar, while the British pound is down around 58 per cent this year.

On Wednesday, it was trading around $19,515 and 17,940 versus the British pound. The criptocurrency hit a two-week high against the British pound on Tuesday.