Bitcoin price rises 7% while pound falls

El Salvador’s bitcoin-friendly president Nayib Bukele reminded the UK that bitcoin becomes legal tender in 2021.

Bitcoin Price Rises

Bitcoin price rises in value despite the fact that financial markets are still going down and there are indications that the pound may go below dollar parity.

Because of the government’s borrowing throughout the coronavirus pandemic. Supply chain issues with China, and rising commodity prices as a result of the conflict in Ukraine. The United Kingdom is facing slower growth and increased inflation as a result of these factors.

The British chancellor of the exchequer Kwasi Kwarteng then signaled that he would commit to billions of pounds of additional borrowing. Which further aggravated the already inflationary atmosphere that had been created.

On Friday, the chancellor of the United Kingdom, Kwasi Kwarteng, announced that he intended to eliminate the maximum income-tax rate of 45%, postpone a scheduled increase in the cost of national insurance, and erase the stamp duty on property acquisitions of less than £250,000 ($270,000).

After making this statement on Saturday, he followed it up on Sunday by implying that additional tax cuts would be forthcoming.

Pounds falling against Dollar

As a result of the new chancellor’s mini budget being released on Friday, foreign exchange markets reacted by sending the pound’s value against the dollar to its all-time low (GBPUSD=X).

Despite the rapid rise of the dollar, US equities are in a free fall, with the S&P 500 (GSPC) closing on Monday at its lowest level since December 2020. This is the lowest level it has been since December 2020.

Bitcoin (BTC-USD), on the other hand, has witnessed a rise to start the week, in contrast to the falling value of the pound and the falling equity markets.

According to statistics provided by Coingecko, the price of one bitcoin in US dollars has increased by 8% in the past 24 hours. Reaching a current level of $20,240 per coin. Bitcoin is the digital asset with the greatest market capitalization in the world.

The total market capitalization of all digital assets rose today by 5.7%. Taking it to a new all-time high of $1.01 trillion. Cryptocurrency prices rose sharply across the board.

What steps can the United Kingdom take to halt the value of the pound?

Raising interest rates to entice foreign investors with better returns is the primary instrument that can be used to prop up the value of the pound. As well as any other currency that is on the decline.

On Monday, the governor of the Bank of England, Andrew Bailey, stated that the central bank would not hesitate to hike interest rates if the situation warranted it.

The United Kingdom’s central bank has decided not to implement an unexpected increase in interest rates. It is despite calls for emergency action from some analysts. As a result, the value of the pound has decreased to $1.06, after having gained some ground earlier.

According to Tien, a professor at George Washington University. “the Bank of England and the Bank of Japan may both decide to hike rates in order to match the rising interest rates in the United States.”

El Salvador’s president tweeted about 2021

Nayib Bukele, the president of El Salvador, is a supporter of bitcoin. He recently took the opportunity to remind the United Kingdom of some tweets. He tweeted shortly after his country proclaimed bitcoin a legal tender in September 2021.

At the time, the Bukele regime was the target of ridicule from the International Monetary Fund (IMF), the European Central Bank (ECB), and the Bank of England (Bank of England) because it had presided over the passage of a new Bitcoin Law, which the aforementioned financial institutions predicted would have a negative impact on El Salvador.

Bukele reminded the Bank of England about a statement he had delivered in the aftermath of the Bitcoin Law in November 2021 in a tweet that he made on Tuesday. He directed the Bank of England to the communication.

On Twitter, the President of El Salvador addressed a message to the Bank of England with the statement “I told you.”

The note from the previous year was included, and it stated, “I’m genuinely concerned about the Bank of England producing money out of thin air.”

Bukele continued by reminding the central bank of the United Kingdom of another comment he had made following the passage of El Salvador’s Bitcoin Law.

He also linked a tweet from the previous year in which he stated: “Is the Bank of England ‘concerned’ about El Salvador’s use of bitcoin? Really? It appears that the Bank of England is genuinely concerned about the welfare of the people in this country. Right? To put it another way, they have always shown concern for our people. Always. You’ve got to give it up for the Bank of England.”

Why is the dollar of the United States so strong?

There are two primary factors that contribute to the strength of the United States Dollar. This been on an upward trend since the middle of 2021 and reached a 20-year high versus six major currencies only last month.

The first factor is the level of confidence that other economies have in comparison to the United States economy.

A vote of confidence in the fundamentals of the economy is indicated by a stronger currency. This is in much the same way that a vote of confidence in the economy of a country is shown by a vote of confidence in the currency of that country.

For a long time, investors have turned to the dollar as a safe haven. Despite the fact that the US economy is struggling with rising inflation and sluggish growth.

Who wins?

A higher currency means cheaper imports and trips abroad for Americans.

Everyone else has it worse.

A rising currency makes US products and travel more expensive and may increase inflation elsewhere.

Oil, metals, and lumber are sold in dollars, which boosts their local worth. Higher energy prices will raise other costs.

Tsiamalis said a stronger dollar in the US makes consumer goods imports cheaper and can help limit inflation.

A high dollar makes it difficult for many developing countries to repay US-denominated obligations.

“Many countries will struggle to locate local currency to service their loans,” Tsiamalis added.

These countries must raise taxes, issue inflationary local money, or borrow more. The outcome might be a deep recession, hyperinflation, or a sovereign debt crisis.

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