With the soaring dollar, European currencies are depreciating day after day. The Euro (€) has lost more than 21% of its value since the beginning of the year, against more than 24% for the pound sterling (£). A loss that is pushing more and more investors to turn to cryptocurrencies. Bitcoin has thus recorded a rise of 5.6% over the past week, with a record high of $1.0327 on Monday.
Bitcoin becomes less volatile than the Euro and the British Pound
The dollar far outperforms the Euro and the Pound Sterling
The race between these three major global currencies has always been tight. But in recent weeks, the dollar has significantly widened a gap with its “competitors”. The British pound hit its all-time low, valued at $1.035. The euro is not doing well either, with a constant fall since January. The reasons for this devaluation European currencies can be explained:
- on the one hand by the war in Ukraine,
- and on the other by the unparalleled inflation that Europeans have already suffered in recent months.
This situation greatly benefits the dollar, but especially cryptocurrencies. In response to inflation, investors prefer to turn to cryptocurrencies. This largely explains the staggering increase in recent days.
Decryption: if the devaluation of the Euro and the British Pound continues, Bitcoin will always trade higher. The same is true for other famous cryptocurrencies, such as Ethereum (ETH).
A historic moment for Bitcoin!
For the first time since its creation, Bitcoin is suddenly less volatile than fiat currencies (notably the Euro and the British Pound). This comforts some, but also becomes problematic for others (especially for central banks). An even more memorable moment knowing that at the beginning of the year, Bitcoin lost half of its value.
When central banks raised interest rates in early 2022, Bitcoin was mostly traded as a risky asset. It has even been compared to tech stock trading. A comparison that ultimately turned out to be totally wrong, especially in the last month. In addition to being mostly in the green, Bitcoin has seen more upside than downside. The tech-heavy Nasdaq, meanwhile, was down almost 10% in the same period.
Until the Euro and the Pound Sterling gain in value (and above all stabilize), cryptocurrencies seem to be on the rise. Especially if the dollar continues to widen the gap between currencies, crypto investors are likely to rise. An increase that will only support the rise in the price of Bitcoin!
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