UK bitcoin investors suffer as dollar dwindles
UK investors in bitcoin and other cryptocurrencies have seen their returns eaten away as the value of the US dollar continues to fall against the pound.
Bitcoin’s rally in recent days has pushed its price up to $94,000, meaning that it has returned 0.4 per cent since the start of 2025.
However, this is only in comparison to dollars, as the cryptocurrency has actually fallen almost six per cent since the start of the year in pound sterling.
In January, the dollar reached its highest against the pound since October 2023, but has since dropped more than eight per cent in value. One pound is now worth $1.33, up from $1.22 in January.
This has left returns for UK investors in cryptocurrencies far below those of US investors, as the vast majority of the digital asset market trades using US dollars.
For example, the top 13 most popular stablecoins, which are overwhelmingly used to buy other cryptocurrency, are pegged against the dollar, while there isn’t even a sterling version among the 100 most popular stablecoins.
Other cryptocurrencies have faced similar problems, with Ethereum dropping 46 per cent in US dollar terms since the start of the year, compared to 49 per cent for UK investors.
Bitcoin’s recovery
After reaching a record high of $109,356 the day before US president Donald Trump’s inauguration on 19 January, bitcoin’s price has steadily eroded, thanks largely to a drop in the US stock market.
While some had said that cryptocurrencies were a ‘safe haven’, gold was actually the first choice of investors looking to flee the uncertainty of US markets.
“Bitcoin during its infancy, has always been uncorrelated to the stock market, however, bitcoin prices in recent months have demonstrated that it has now become part of the institution, and thus, is correlating with the macroeconomic state of the global economy,” said Zach Burks, CEO and founder of Mintology.
Over the last few years, bitcoin’s price became more correlated with the performance of major US stocks on the S&P 500, as investors used it as a leveraged play on the broader market.
However, since the start of last month, bitcoin and American stocks have diverged in performance, with the former performing much more strongly.
This is because bitcoin and other cryptocurrencies have been “once again a major beneficiary of the return of risk-on sentiment,” explained David Morrison, senior market analyst at Trade Nation.