Published: February 28th, 2024
Former Coinbase CTO Balaji Srinivasan tweeted an analysis this week showing that Bitcoin’s price has hit all-time highs in the local currencies of 14 countries, though the USA is notably absent from the list.
The countries are Japan, Argentina, Egypt, Turkey, Nigeria, Laos, Congo, Burundi, Ghana, Pakistan, Lebanon, Malawi, Sierra Leone, and Sudan. According to Srinivasan’s calculations, together these countries represent more than a billion people and over USD seven trillion in GDP.
BTC’s local valuations include 7,715,409 Japanese yen, 1,589,342 Turkish Lira, and 42,993,647 Argentine pesos.
‘The Greenback can be a vampire draining the vitality out of other national currencies. But Bitcoin defies this paradigm,’ said Srinivasan in an extended Twitter / X thread. ‘Since BTC’s inception, the Dollar has fallen against it by six orders of magnitude.’
The result creates a paradox whereby the 14 nations where BTC has risen to an all-time-high have all watched their currencies experience serious depreciation against USD over the past 24 months. Global financial markets have demonstrated high levels of volatility over the past few years. To hedge against instability and loss of buying power, cryptocurrencies like Bitcoin have become an appealing option.
The Turkish Lira, for example, has seen a dramatic devaluation against the Greenback, with the USD/TRY rate rocketing from circa 7.80 in November 2021 to above 31 at time of writing. The Argentine Peso has followed a similar trajectory, weakening from approximately 98 to over 835 against the Dollar in the same time frame.
BTC's price was USD 56’887 at time of writing, which is still less than the USD 69,043 reached at its peak in November 2021. Bitcoin has been steadily climbing upward in USD terms since September of 2023, pushed higher by forex trader optimism about the SEC’s expected approval for BTC spot exchange-traded funds (ETFs).
In April of last year, Whales, institutions, and corporates went bullish on Bitcoin again, pouring more than USD 114 million into BTC funds.
A report from digital assets firm CoinShares said big investors moved millions into leading Bitcoin funds for fourth weeks running, in what analysts called a ‘flight to safety’. The biggest beneficiaries of inflows were established funds for accredited investors from firms like 21 Shares, 3iQ, and Grayscale.
BTC was the main focus, attracting USD 103 million in new investment. The growth happened against a wider market backdrop of ‘very low volumes’ in Bitcoin trades generally, CoinShares said.
CoinShares noted in the report that improving prospects for crypto as an asset class was down to fears about the ‘ongoing challenges’ being experienced by traditional finance over the past three months.
Revisiting a trend first seen in early 2022, major investors are once again looking to Bitcoin as a ‘safe-haven’ investment. Confidence in ‘TradFi’ has been shaken in the aftermath of the collapse of Silicon Valley Bank, Signature Bank and Credit Suisse in Europe.
Ethereum, the second-place coin by market capitalisation, implemented its Shanghai blockchain upgrade on Wednesday, 12th April, enabling the withdrawal of staked ETH by network users.
Analysts predicted that more than USD 300 million of the coin would be sold-off in the aftermath of the upgrade, but ETH’s price has actually risen since Shanghai was implemented.
Perhaps buoyed by the surge in investor interest, Bitcoin’s price was holding firm at just above USD 30,000 at time of writing, the level it reached seven days ago.
A year earlier in April 2022, a previous CoinShares report found that crypto markets were losing ground, firming up an emerging consensus that the crypto winter would extend into summer and possibly beyond.
Total market cap had fallen to USD 1.4 trillion while BTC’s price was also sliding towards USD 30,000.
Whales reacted by moving more assets into Bitcoin and Ethereum, plus other derivative instruments designed to track other cryptocurrencies.
‘It's worth noting that we haven’t witnessed the same spike in investment product trading activity as we would expect to see during extreme periods of price weakness,’ the forward to the CoinShares report says. 'The question is: does this mean the month-long run of negative crypto sentiment we’ve seen is finished?’
One reason mooted for the anomaly was the fact that price action which had tanked Bitcoin and Ethereum to depths some 50 per cent below their all-time highs was actually less drastic than falls seen in previous bear markets.
‘Compared to the deepest lows of past BTC bear markets, the current movements aren’t as bad. In June July 2021 BTC reached a drawdown of -53.3 per cent, and the crypto bear markets of 2015, 2018 and 2020 saw lows between –77 per cent and –85 per cent off their all-time-highs.’
What did increase in Spring 2022 was price speculation. A record amount of money, USD 4 million, flowed into Bitcoin short positions in April 2022. Investors created more ‘shorts,’ using derivatives like futures to bet on whether an asset would rise or fall in price.
That drove up the total value invested in short Bitcoin products to USD 45 million, a previous all-time-high. Despite that, the value invested in long Bitcoin positions was still far beyond the short money. As a percentage, CoinShares said the USD 45 million in shorts amounted to about 0.15 per cent of the USD 30 billion held in long Bitcoin products.
That indicated sustained crypto optimism, but other analysts said it would likely start to wane.
In a May 2022 newsletter, blockchain analytics firm Glassnode predicted that if prices fell to around USD 33,500 per BTC, it wouldn't be long before crypto investors found themselves facing the same headwinds seen in previous bear markets. Hours after Glassnode’s report was published, BTC fulfilled the prophecy, dropping as low as USD 30,517 before bouncing back slightly.