Bitcoin trading volume spikes against weakening currencies

Bitcoin (BTC) trading volume against several global currencies has spiked in recent months, including the BTC-GBP (British pound) pair, which rose 233% in September after the currency fell to an all-time low of £1.03 against the US dollar, according to a report by digital asset data provider CryptoCompare.

As the global economy continues to reel from high inflation and energy crisis, several currencies have seen their purchasing power and value decline against the US dollars.

The abnormal jump in trading volume suggests investors and traders could be hedging their weakened currencies with bitcoin as well as stablecoins.

Traditional and crypto markets saw a major fall in September as macroeconomic conditions continued their bearish sentiment.

Bitcoin remained the least volatile asset and the most dominant across major cryptocurrencies. In September, BTC outperformed both the S&P500 and Nasdaq, which saw negative returns of 9.34% and 10.5% respectively, falling for the second month in a row.

Ethereum (ETH) was the worst performer after the long-waited Merge proved to be a ‘buy the rumour, sell the news’ event.

After the Merge, the price of Ethereum plummeted to $1,300 levels, trading below its 50-day moving average while volatility also increased.

This led to a 36.2% decline in spot volumes to $439 billion. Future volumes also saw a fall of 6.52% to $932 billion, showing continued relative strength against spot markets.

As futures allow market participants to bet against an asset more easily, it is unsurprising these volumes have remained elevated compared to the spot.

According to CryptoCompare, volatility across cryptocurrency markets saw a slight increase in September amid the interest rates spikes and the unstable macro environment. Ethereum and Solana continued to be the most volatile assets with 30-day volatility of 80.0% and 82.6%, respectively. Bitcoin’s volatility rose 19.2% in September breaking a declining trend that started in June.

While most volumes declined in September, both USDT and USD volumes for BTC increased by 15.4% and 15.1%, respectively, suggesting market participants are piling into BTC following recent volatility in fiat currencies, including the British pound and Japanese yen.

USDT volumes for ETH saw a big drop of 49.4% amid its transition to proof of stake. Cardano and Solana saw declines in USD volumes, while SOL saw a noticeable rise of 10.5% in USDT volumes in September.