When investors start using bitcoin as insurance, you know as a developed country that your currency is in trouble.Following the release of Liz Truss’ mini-budget on September 23, which sent financial markets into a tailspin, some investors stampeded away from the pound and in the direction of cryptocurrencies.
According to data from research firm CryptoCompare, trading volumes between bitcoin and the pound increased overall by 233% in September compared to the previous month, while those between the cryptocurrency and the equally damaged euro increased by 68%.
According to market research firm Kaiko Research, trade volumes between sterling and bitcoin reached a daily record high of 846 million pounds ($955 million) on the Monday following the Friday budget shock, when the pound plunged to its lowest-ever level against the dollar.
The volatility of bitcoin, meanwhile, is almost at its lowest point of the year. In contrast, according to the ICE BofAML U.S. Bond Market Option Volatility Estimate Index, the volatility of safe-haven U.S. bonds is almost at its highest level since March 2020.
In fact, according to statistics from Refinitiv, U.S. Treasuries have been just as volatile as bitcoin over the past month of market turbulence. Bitcoin and the 10-year U.S. note are currently sitting around 21.According to Ed Hindi, chief investment officer at Tyr Capital, “It was the first time we’ve seen such a big surge in (bitcoin) volumes for the currency of a developed country.”