As currencies including the British pound and Chinese yuan tumble, Bitcoin has bucked the trend, growing 6.3% over the past seven days and flirting with $20,000.
Macro conditions, including rising inflation and fiscal uncertainty, have battered global markets. Even though Bitcoin has largely conformed financial swings, its strong performance over the past week has shocked some traders and underscored the turbulent times.
“You know we’ve reached a unique time in history when #Bitcoin suddenly is less volatile than fiat currencies,” tweeted Sven Henrich, founder of the markets research firm NorthmanTrader.
The British pound has fallen over 5% over the past week and is nearing parity with the U.S. dollar. Analysts attribute the decline to discontent with the new policies of freshly appointed Prime Minister Liz Truss, as well as the growing strength of the U.S. dollar due to rising interest rates.
“This isn’t Bitcoin,” tweeted Angela Rayner, a Labour Party member in U.K.’s Parliament, along with an image of a rapidly descending chart. “It’s the British pound.”
Other major currencies have similarly suffered, with China’s yuan also decreasing against the U.S. dollar. Analysts attribute this to wariness over the country’s Covid response and mounting economic woes.
Bitcoin has faced its own choppiness in September, rising at the beginning of the month before declining sharply in mid-September amid higher-than-expected reports of inflation in the U.S.
Even though Bitcoin has been touted as a hedge against inflation, its linkage with U.S. markets demonstrates its increasing influence on traditional finance. Crypto entrepreneur Tyler Winklevoss tweeted that Bitcoin’s properties “dictate that it should be inversely correlated to inflation,” with its underperformance demonstrating “just how early it is.”
As the New York Times’ DealBook reported, Bitcoin has largely traded like risky assets, such as tech stocks. Its upsurge over the past week has been something of an aberration, with Bitcoin slightly in the green over the month while the tech-dominated Nasdaq is down nearly 10%.
Supporters seem to be enjoying the recent upswing, especially as traditional assets decline. Bank of England Gov. Andrew Bailey has been particularly critical of the cryptocurrency, which Bitcoin Magazine made sure to note.
“The British pound is down 12% since Bank of England Governor said ‘Be prepared to lose all your money’ in Bitcoin and crypto,” the Bitcoin Magazine account tweeted.
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