Metrics Suggest that Investors Are Moving to Crypto from Fiat
The last week was quite devastating for many fiat currencies with the Chinese Yuan, British Pound, and Euro losing substantial value due to many reasons including the ongoing Russia-Ukraine war that creates chaos in many large European economies like Germany, Italy, and the UK.
Due to various reasons, both the British Pound and EURO lost about 3% — 4% since September 26. While prices have been retracing against the US dollar, movements are cautious and unmotivated. The British Pound has been especially volatile reacting to any new information from the UK’s central bank, pension funds, and the government.
More people are moving their capital to crypto
Increased trading volumes on all exchanges indicate that more users are interested in purchasing and trading cryptocurrencies amidst the chaos seen in monetary systems on the Old Continent. It seems that people are panicking and moving their capital to the crypto industry in hopes to battle inflation and uncertainty.
The British Pound is still 5.4% below its monthly high despite a strong recovery over the two last days. The Euro is 3.9% below. The US dollar has seen some major setbacks as well and the recovery of the BP and Euro can be related to the weakening of the dollar instead of signs of economic health improvement in the EU.
Amidst the apparent contraction of fiat currency value, many investors are preparing to move their capital to funds that are working with crypto. In the US, Fidelity Investments and JPMorgan Chase are offering suitable products allowing large investors to move huge sums of money disrupting the market. We did not see any Bullish movements in crypto markets, but volumes have been growing steadily indicating an influx of new buyers.
Is crypto the answer we are all looking for?
The global recession is not even close to wrapping up. The upcoming winter will likely devastate the UK and Germany with many other European countries also feeling the wrath of the cold. The US economy looks to be in bad shape too allowing many analysts to predict high levels of inflation by winter. Bitcoin and Ethereum could offer an alternative to commodities and real estate, but the true resilience of crypto assets will be tested alongside national indices.