LONDON, Sept 28 (Reuters) – Trading volumes between the British pound and cryptocurrency bitcoin rose to a record high after the pound fell on Monday, according to market data firm Kaiko Research, in what analysts said was likely a rush by investors to dump their pounds for the digital asset or profits from arbitration.

The pound fell to a record low against the dollar on Monday, after plunging the previous Friday after the British government announced unfunded tax cuts. read more

The volume of transactions in the bitcoin-sterling trading pair across eight major exchanges globally rose to a record 846 million pounds ($920 million) on Monday, according to Kaiko Research, compared with an average of about 54.1 million pounds per day so far in 2022.

The increase was likely due to traders swapping sterling for bitcoin, said James Butterfill, head of research at crypto firm CoinShares.

“There is a high correlation to bitcoin volume growth and political/monetary instability,” he said.

Butterfill said that there have been spikes in the crypto trading volume of other currencies in the past, such as the Russian ruble and the Ukrainian hryvnia, but he had never seen such large movements in the bitcoin-sterling pair’s volume.

Conor Ryder, research analyst at Kaiko, said the data suggests cryptocurrency markets responded to the volatility of fiat currencies. When the pound crashed on September 26, “opportunistic investors rushed to crypto exchanges offering BTC-GBP to try to profit via arbitrage from any mispricing of bitcoin across the major fiat currencies,” he said in emailed comments.

Crypto exchange Bitfinex said it saw a “significant increase” in volume and trading activity for the bitcoin-sterling pair on Monday, which Bitfinex analysts said “underscored the potential of the largest cryptocurrency to benefit from an apparent fragility in fiat currencies .”

To be sure, cryptocurrencies are highly volatile, and the price of bitcoin has fallen sharply so far in 2022 as rising interest rates prompted investors to ditch riskier assets. read more

Against the dollar, bitcoin is down around 58% so far this year, while the British pound is down 20%.

Bitcoin traded around $19,515 on Wednesday and at 17,940 against the British pound. The cryptocurrency hit a two-week high against the British pound on Tuesday.

($1 = 0.9195 pounds)

Reporting by Elizabeth Howcroft; Editing by Michelle Price and Jonathan Oatis

Our standards: Thomson Reuters Trust Principles.

LONDON, Sept 28 (Reuters) – Trading volumes between the British pound and cryptocurrency bitcoin rose to a record high after the pound fell on Monday, according to market data firm Kaiko Research, in what analysts said was likely a rush by investors to dump their pounds for the digital asset or profits from arbitration.

The pound fell to a record low against the dollar on Monday, after plunging the previous Friday after the British government announced unfunded tax cuts. read more

The volume of transactions in the bitcoin-sterling trading pair across eight major exchanges globally rose to a record 846 million pounds ($920 million) on Monday, according to Kaiko Research, compared with an average of about 54.1 million pounds per day so far in 2022.

The increase was likely due to traders swapping sterling for bitcoin, said James Butterfill, head of research at crypto firm CoinShares.

“There is a high correlation to bitcoin volume growth and political/monetary instability,” he said.

Butterfill said that there have been spikes in the crypto trading volume of other currencies in the past, such as the Russian ruble and the Ukrainian hryvnia, but he had never seen such large movements in the bitcoin-sterling pair’s volume.

Conor Ryder, research analyst at Kaiko, said the data suggests cryptocurrency markets responded to the volatility of fiat currencies. When the pound crashed on September 26, “opportunistic investors rushed to crypto exchanges offering BTC-GBP to try to profit via arbitrage from any mispricing of bitcoin across the major fiat currencies,” he said in emailed comments.

Crypto exchange Bitfinex said it saw a “significant increase” in volume and trading activity for the bitcoin-sterling pair on Monday, which Bitfinex analysts said “underscored the potential of the largest cryptocurrency to benefit from an apparent fragility in fiat currencies .”

To be sure, cryptocurrencies are highly volatile, and the price of bitcoin has fallen sharply so far in 2022 as rising interest rates prompted investors to ditch riskier assets. read more

Against the dollar, bitcoin is down around 58% so far this year, while the British pound is down 20%.

Bitcoin traded around $19,515 on Wednesday and at 17,940 against the British pound. The cryptocurrency hit a two-week high against the British pound on Tuesday.

($1 = 0.9195 pounds)

Reporting by Elizabeth Howcroft; Editing by Michelle Price and Jonathan Oatis

Our standards: Thomson Reuters Trust Principles.