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Why Going Long on the Bitcoin Price is a Better Bet Than Holding the British Pound Right now

Why Going Long on the Bitcoin Price is a Better Bet Than Holding the British Pound Right now

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Receive $10 in Bitcoin when you buy or sell $100 or more on Coinbase! https://mathisenmarketing.com/coinbase

Going long bitcoin today is a more sensible strategy than going long the British pound when the currency is at historic lows against the US dollar.

Unfortunately for the British, this is not a trading decision because if you are paid in pounds, you are long pounds.

Should Brits get paid in BTC? Bitcoin price outlook looks better than GBP

Foreigners are fleeing British possessions. Investors are demanding a high price to finance a gigantic and growing current account deficit of 8% – up from 2% about a year ago.

If you live in the UK, there’s not much you can do to dodge the bullet, other than ask your employers to pay you in the mighty dollar, which keeps getting stronger, or bitcoins. Bitcoin? Really! Hang in there.

Crypto schadenfreude is sweet

Crypto prices are being pushed down, but it feels like a side screen as all asset classes fall in value.

At the center of the current turmoil are the British economy and the British pound.

Indeed, at times like these, crypto holders can be forgiven for showing a little schadenfreude.

Once used to batting away ignorant comments about the supposed emptiness of the digital asset class, the gyrations of stocks, bonds, currencies and commodities are watched with a sly smile.

The market is starting to feel confused.

GBP/USD is at an all-time low of 1.0373 and the benchmark WTI crude oil index is down 37% since mid-June. UK bond yields (gilts) exploded and this helped cable (GBP/USD) return to 1.07.

Markets are pricing in a 200 basis point hike from the Bank of England by November as it tries to stem the currency’s slide. These are shocking numbers.

Meanwhile, the Bank of England “has not decided to comment on market stabilization” and calls for an emergency rate hike are getting louder and more demanding.

Central bankers are finding themselves in a corner as they try to tighten the circle of inflation control by raising interest rates without tipping the world economy into recession.

Some economies are already in recession.

Undoubtedly, the feeling of an economic crisis is growing, and the fractured political landscape in many countries does little to calm nerves.

Comparing crypto prices and the appreciation of the pound, bitcoin influencer and long-time supporter Dan Held offered a timely reminder of Bank of England governor Andrew Bailey’s previous remarks on bitcoin and related issues:

Central banks tightening into a recession makes crypto look good

The latest number descending into recession feels like a tipping point as the global economy turns from a bond price bubble (low interest rates) to an explosion in bond yields. Global bonds are having their worst year since 1949.

Increasingly, it appears that the Fed and other central banks are tightening their grip on recession because, in their view, there is no other option if inflation is to be contained.

This means that all eps forecasts for next year are lost – economic activity will begin to slow down – certainly so in the UK and the rest of Europe and soon in the US as well.

As Tom Keene said on Bloomberg Surveillance this morning: “This is not just about the soap opera known as the United Kingdom.

Don’t count out Bitcoin – on the contrary, it’s time to include DCA

This brings us to the bellwether of the crypto price complex – bitcoin.

Bitcoin is down 1.2% as it tries to hold above a short-term low of $18,700.

Still, it’s nothing compared to historical FX and interest (bond) returns.

Jordan Rochester, currency strategist at Nomura, has a very gloomy – and realistic – forecast for the UK market, noting, in a nod to the country’s policymakers, that “hope is not a strategy”.

He believes the pound will be below parity with the dollar in the first quarter of next year at 0.95.

The greater the distress in non-crypto asset classes, the more attractive crypto is.

This may seem like a bold, if not reckless, statement given the ongoing crypto winter.

What do crypto prices have to offer that the British pound and other assets cannot?

However, crypto has a few things that the British pound, for example, does not.

The possibility of bitcoin bottoming out and starting to recover is greater than GBP at this point, making the current convergence of factors a buying opportunity:

Bitcoin doesn’t have much to lose anymore – the same can’t be said for stocks and bonds.

Bitcoin still has the potential to be a safe haven against inflation if and when its correlation with stocks breaks.

Which begs the question, what does it take to separate crypto from stocks?

The answer depends on the capitulation – will the fateful day come first in crypto or stocks?

It may come sooner in crypto, as stocks are unlikely to see a capitulation (where buyers sell off and exit the market) until the second half of next year. On the contrary, it is a good thing for the medium to long term holder of bitcoin, Ethereum and other crypto.

You might even want to hold one of the new types of coins in the crypto gaming sector, such as Tamadoge, which will be listed on OKX tomorrow.

Finally, even if you’re not in the eye of the UK storm, what’s happening there can provide clues as to how cracks in the global economy can spread into chasms — and show why holding crypto could be a smart move.



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