Plunging pound could lift crypto price in the UK
The UK's currency, the Sterling, fell to 1 GBP/1.1403 USD, surpassing the trough of 1 GBP/1.1412 USD dollars seen at the start of the global pandemic in March 2020, before recovering to 1 GBP/1.15 USD. The Sterling has currently fallen 19% against the dollar since January.
The sharp drop in the pound's value could attract investors to cryptocurrencies such as Bitcoin, lift crypto price and encourage adoption in the UK. According to new research, the UK is the only major European economy that has seen massive growth in crypto adoption since the beginning of the year. Investors hope to recover from Sterling's price drop by moving toward crypto adoption.
According to Chainalysis, one of the likely causes of the UK's dominance in crypto is the city's thriving tech scene and world-class financial institutions. Decentralised finance, or DeFi, financial services operating on blockchain technology, accounts for just under half of all crypto activity in the UK.
The United Kingdom is ranked 17th worldwide for cryptocurrency adoption, up four spots from 2021. According to a February 2022 survey, the cryptocurrency ownership rate in the United Kingdom is 6.1%. The number of cryptocurrency investors in the United Kingdom had increased by 103% since the start of 2018 when only 3% of the people - 1.5 million – owned cryptocurrencies.
Other than the United States, it is the only high-income country in the top 20. Other countries near the top list are emerging markets with volatile currencies and capital controls. Vietnam came in first place, followed by the Philippines and Ukraine.
Kim Grauer Statement
In conversation with the Evening Standard, Kim Grauer, Director of Research at Chainalysis, gave the following statements:
"I don't think people think, 'the pound is down, so I'll turn to crypto,' but as the pound falls, other options may become more appealing -' my portfolio is seeing lower returns, let me think about other options.'
"One of the biggest reasons...many countries around the world push people into crypto is capital controls that make it free to transact," Grauer explained.
"Those people are happy to use crypto as an alternative, which is a different reason than in India, where people use it for NFTs."
Author: Priya Kumari
Priya is a passionate content writer and the co-founder of Finendorse. She is an enthusiastic crypto investor and has a huge interest in the upcoming digitisation age.