On the 24th of October, Kaiko published a report on the crypto exchange on Medium, which said that the recent volatility of the British Pound might encourage several investors to try their hand at crypto trading. Last month in the UK market, the trading volumes of Bitcoin reportedly surged, which showed that traders have looked to take advantage of high exchange rate volatility.
In recent months, the Pound has lost a significant amount of its value, and on the 26th of September, it hit an all-time low against the US Dollar. Many people have attributed this low Pound trend to the tax cuts. Under former Prime Minister Lizz Truss’ premiership, the former chief finance minister Kwasi Kwarteng proposed tax cuts in a recent budget.
On this exchange trend, Bitfinex took much of the benefit, as in the last week of September, its market share nearly doubled from 37% to 70%. Only Bitfinex fully benefited from this common Pound trend, while other exchanges failed to benefit from this.
According to Kaiko’s data, Binance and Coinbase, the rivals of Bitfinex, saw a substantial decline in BTC-GBP volumes, and their share dropped from about 30%. However, the volumes on Binance fell in the second half of last year, whose reason was the exchange was forced to pause bank transfers from the European Single Euro Payments Area.
Claire Medalie, the director of research in Kaiko, told Decrypt that cryptocurrency exchanges are taking advantage of high fiat market volatility to expand their fiat on-ramps and trading services. Moreover, he said that trade volume denominated in GBP surged to all-time highs, dominated by activity on Bitfinex, at the end of September.
Claire also explained how Bitfinex fully benefited from that exchange trend, as he said Bitfinex expanded wire transfers to include the British Pound through a quicker payment service two weeks later. By adding these payment services to Bitfinex, its trading volume increased, resulting in a benefit for it.
It’s not the first time investors have turned to crypto due to fiat currency prices. According to data from Chainalysis, a blockchain analytics firm, across three different exchanges in the last quarter of 2021, the trading volume of crypto using the Turkish lira jumped to an average of $1.8 billion daily.
