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While the British pound reaches its 31-year low value, the price of Bitcoin continues to surge.
Mainstream investors and financial institutions have dismissed Bitcoin as a currency due to its intense volatility. The British pound recently plunged to more than 6% in minutes, crashing various markets and exchanges.
While the British pound came closer to reaching its 31-year low value, the price of Bitcoin continues to surge, reaching $635 with experts presuming a $700 breakout by the end of October.
Since Brexit, the British pound has continued to struggle in dealing with its declining value. The rapid devaluation of the national currency forced a substantial number of financial and Fintech startups to relocate, moving to economically and financially stable regions such as Germany.
Earlier this week, the UK pound plunged more than 6% in a matter of minutes, creating a major upset in the Asian market. Matt Simpson, senior market analyst at ThinkMarkets in Singapore stated:
“It was just another quiet day in Asia, and then, Bang! All the lights went red.”
The pounds sudden but expected crash against the US dollar drastically increased the value of imported goods such as Apple products and airline fuel.
EasyJet, a British low cost airline carrier, stated that it will most likely suffer from a 25% in annual profit loss due to the crashing pound and surging price of fuel. The firm announced a total loss of $230 mln.
After its initial decline on October 6, the pound plunged once again, demonstrating a 1.78 decrease in value in about 6 hours.
According to Bloomberg, Monetary Policy Committee member Michael Saunders wrote in a testimony that a further decline of pound must be considered, expressing his concerns on the rising volatility of the British pound.
“Saunders said that he was concerned about volatility in sterling as it pushed up inflation. Despite this, we think that the BOE is more focused on growth than on inflation at this point in time,” said ABN Amro currency and commodity strategist Georgette Boele.
Despite Bitcoin’s overwhelming performance over the past few years, its volatility rate has always been in question. Since early 2016, the volatility rate of Bitcoin has been substantially lower than the pound’s, which is shocking considering the fact that the pound is a national currency governed and controlled by a central entity.
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