Why going long on the Bitcoin price is a better bet than holding the British pound right now

Going long the bitcoin price is a healthier strategy today than going long the British pound as the currency touches historic lows against the US dollar.

Unfortunately for Brits, this is not a trading decision because if you get paid in GBP, you are long in sterling.

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 the gigantic and widening current account deficit of 8% – a year ago it was 2%.

If you’re a UK resident, there’s not much you can do to dodge the bullet, apart from asking your employers to pay you in the mighty dollar, which is getting stronger, or in bitcoin. Bitcoin? Really! Carry with me.

Crypto schadenfreude is sweet

Crypto prices are being pushed down, but it feels like a sideshow when all asset classes fall in value.

At the center of the current turmoil is the UK economy and the British pound.

At times like this, holders of crypto can actually be forgiven for showing a bit of mischief.

Having become accustomed to batting away uninformed comments about the perceived emptiness of the digital asset class, it is with a wry smile that the swings in stocks, bonds, currencies and commodities are observed.

The markets are beginning to feel disordered.

GBP/USD is at an all-time low of 1.0373 and the WTI crude index is down 37% since mid-June. British bond yields (gilts) rose sharply, helping cable (GBP/USD) retreat to 1.07.

And the market is pricing in a 200 basis point increase from the Bank of England by November as it tries to stop the unfolding collapse of the currency. These are staggering numbers.

Meanwhile, the Bank of England has “undecided whether to comment to stabilize the market” and calls for an emergency rate hike are growing louder and more insistent.

With central bankers forced into a corner as they attempt to square the circle to control inflation through interest rate hikes without tipping the global economy into recession.

Indeed, some economies are already in recession.

There is undoubtedly a growing sense of economic crisis, with a divided political landscape in many countries not exactly helping to calm nerves.

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

Central banks tightening into a recession make crypto look good

The latest chapter in the downward slide into recession feels like a turning point as the world economy turns from a bond price bubble (low interest rates) to a bond yield explosion. Global bonds are having their worst year since 1949.

It increasingly looks like the Fed and other central banks are tightening into a recession because, as they see it, there is no other choice if inflation is to be tamed.

That means all the eps forecasts for next year are out of whack – economic activity is starting to slow down – that’s certainly the case in the UK and the rest of Europe and soon in the US too.

As Tom Keene put it on Bloomberg Surveillance this morning: “This is just not about the soap opera known as Great Britain.

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

Which brings us to the hour of the crypto price complex – bitcoin.

Bitcoin is down 1.2% as it struggles to hold above near-term lows around $18,700.

Nevertheless, it is like nothing put together with the historical movements that take place in currency and interest rates (bonds).

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

He believes GBP will be below parity with the dollar by Q1 next year at 0.95.

The greater the distress in non-crypto asset classes, the greater the attractiveness of crypto.

That may seem 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 going for it that the British pound, for example, does not.

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

Bitcoin doesn’t have much left to fall – the same cannot be said for stocks and bonds.

Bitcoin still has the prospect of being a safe haven from inflation if and when the correlation with stocks breaks.

Which begs the question, what will it take to decouple crypto from stocks?

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

It may come earlier in crypto, with stocks unlikely to see capitulation (where buyers sell out and leave the market) until the second half of next year. Conversely, it is a good thing for medium to long-term holders of bitcoin, Ethereum and other crypto.

You might even want to consider holding one of the new breed of coins in the crypto gaming sector, such as Tamadoge, which is going public on OKX tomorrow.

Finally, even if you’re not in the eye of the storm in the UK, what’s happening there can provide clues about how the cracks in the global economy could widen into chasms – and show why it might be smart to hold crypto.