Traditional banks have questioned Bitcoin’s reputation as a safe investment for a long time. There was no central management, prices changed a lot, and it was still pretty new, so it was hard to tell if it was safe from recession or inflation. Anyone can trade and earn in cryptocurrencies with quantum-ai-trading.com.
But investors have kept choosing Bitcoin over fiat currency over the past year when there has been a lot of uncertainty.
Bitcoin is directly caused by inflation
One good example is the Turkish lira (TRY). Since 2018, the currency’s value has been steadily decreasing, and the rate of inflation over the past three years has been over 100%. Compared to the dollar, the value of the lira has dropped 26% since the beginning of the year (USD). In a study from September, PwC said that the Turkish economy is hyperinflationary and that things have been getting worse since 2021 and a lot worse since the middle of summer 2022.
One US dollar is worth 18 Turkish lira in 2017. This is the same as 3.50 Turkish lira. Because of this, the number of US dollars traded for Turkish lira since the start of the year has gone through the roof and is getting close to an exponential level.
Over the past few months, the number of Bitcoin to Turkish Lira trades on centralized exchanges has steadily gone up. Binance says that the price of one Bitcoin in Turkish Lira (TRY) hit its all-time high at the start of 2022, while the 24-hour trading volume for the pair hit its all- time high in May of this year.
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From 2020 to 2022, a graph shows the number and price of BTC/TRY trades on Binance. On September 26, 2022, the value of the British pound fell quickly, just like it did on Black Wednesday in 1992. In just one day, the value of the pound fell by 4.3% against the US dollar.
In a previous article on the same topic, CryptoSlate explained that the drop happened because the Bank of England did something unexpected on the bond market.
On the same day that the value of the pound fell the most in 30 years, the number of BTC/GBP trades rose by more than 1,200% in just one day, reaching an all-time high.
In Japan, where things weren’t much better, the central bank stepped into the foreign exchange market and spent more than $20 billion, or 3.6 trillion yen, to stop the yen from falling even more. People usually think that the government spent all $20 billion on one currency intervention on September 22, but that number shows how much the government spent on currency interventions in September as a whole.
This is the most important thing the Bank of Japan is doing now. It beats the old record set in 1998 with 2.6 trillion yen. The Bank of Japan sold dollars and bought yen during this event. The intervention was thought to help the weak yen, which has lost a fifth of its value against the US dollar so far this year.
Before the government got involved, one yen was worth 144 dollars. After the intervention, it was worth $140 for a short time. But the solution didn’t last long. The intervention had no effect when the yen got more robust against the dollar the next day and reached 145 to one against the dollar.
Japanese investors became less interested in Bitcoin as the yen’s value went down. The BTC/JPY pair was very busy around the intervention time. As the ruble’s value dropped to an all-time low, the number of BTC/RUB trades in Russia skyrocketed. As Russia started to invade Ukraine, investors in that country put their money in bitcoin, which was the riskiest asset they could find.
Even though recent increases in Bitcoin trading volume might not mean that Bitcoin is about to become widely accepted, they show that it is starting to act like a haven asset. Investors are buying a lot of Bitcoin to protect themselves from instability in the economy, inflation, and their currency losing value.