Despite remaining under pressure, the premier digital currency outperformed the major fiat currencies
September saw the traditional financial markets and cryptocurrencies both continue with their bearish trend, which we have seen for the good part of this year. The risk-averse sentiment was reinforced by mounting inflationary pressures. However, Bitcoin (BTC) outperformed both the S&P500 and NASDAQ which saw negative returns of 9.34% and 10.5% respectively. Meanwhile, Ethereum (ETH) was the worst performer in Sep. as the momentum around the much-anticipated Merge fizzled out into a ‘buy the rumor, sell the news event.’
Similar mayhem was seen in forex markets as well, where most of the major currencies collapsed against the safe haven of the US dollar. Typically we see massive market inflows to the Greenback from emerging market currencies under such adverse economic conditions, but this time the problem was even more broad-based. Both the Euro & Pound collapsed against the USD along with a historic weakening of the Yen. I previously covered how EUR and GBP were sold off in favor of BTC in the wake of these massive devaluations.
According to CryptoCompare, another noticeable trend that emanated from this risk-averseness was the spike in BTC trading volumes against the weakening fiat currencies in addition to Euro & Pound (charted above). BTC/GBP pair rose 233% in September after the reserve currency fell to an all-time low of £1.03 against USD earlier in the month. As you can see in the bottom chart above, GBP, AUD, JPY, TRY, and EUR have all seen their price drop by 8.15%, 5.58%, 5.99%, 9.76%, and 6.61% against USD respectively. BTC, on the other hand, gained 3.75% against the Greenback.
The abnormal jump in BTC trading volume against these currencies suggests investors and traders could be hedging their weakened currencies with Bitcoin. Although we didn’t see a big jump in Bitcoin price due to this movement, its reluctance to fall below June lows despite a strong bearish sentiment vouches for investors’ confidence in the premier digital asset. Having said that, it’s still a long road to recovery.
Originally Published on Medium
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