Virtual currencies might represent a potentially viable future asset option or alternative for UK residents amid the uncertainty created due to the coronavirus crisis and the possibility that a hard Brexit that could further weaken sterling and increase the pressure on the Bank of England.
UK investors are taking a growing interest in Bitcoin, with 38 times more money in sterling now being exchanged for the cryptocurrency than this time last year, according to Kraken, a popular cryptocurrency exchange, reports the Sunday Telegraph.
Kraken says 38 times more money in sterling is being exchanged for Bitcoin now than last year and that people trading the US dollar for Bitcoin are also fueling its growth. The cryptocurrency has soared in value in recent weeks to a record $19,920.53 earlier in December.
A previous Bitcoin bull run was seen in 2017 but that was mostly driven by Asian investors, says Kraken.
Bitcoin has long been considered by supporters as digital gold due to its limited, predictable supply and use case as a store of value outside banking influence.
And Bitcoin’s appeal as an alternative store of value asset is strengthening, according to Deutsche Bank.
“There seems to be an increasing demand to use bitcoin where gold used to be used to hedge dollar risk, inflation, and other things,” Jim Reid, managing director, head of global fundamental credit strategy, said, according to ZeroHedge.
Marcus Hughes, Europe manager at cryptocurrency exchange Coinbase, said that the ongoing evolution in cryptocurrency was driving customer activity in the UK.
Hughes added that higher trading volumes of Bitcoin in the UK was due to “increased levels of institutional interest, corporates, including MicroStrategy, taking Bitcoin onto their balance sheets and wider awareness of payment mechanisms”.
Tighter regulation, such as the Financial Conduct Authority’s mandatory register from January for companies selling cryptocurrency assets, may also have helped to made Bitcoin a more acceptable asset for risk-averse investors.