Philippine Peso Hits New Low Against the Dollar, Stable in Bitcoin – Trustnodes

The peso in Philippines has fallen to a new all time low of 59 PHP to the dollar, down 20% from last year’s 47.

In bitcoin however the peso has been trading at a somewhat stable price above one million PHP per BTC.

There’s been some ups and downs, from 1.06 million PHP in July, to now 1.135 million, and that can matter since the average salary in Philippines is 15,200 a month, with this move from July to October amounting to the gain of a yearly salary.

Raising the question of whether bitcoin is actually a hedge in global fiat markets, since for the past three months it has been gaining in pesos, while the peso was losing against the dollar.

That’s a question that depends on timeline, showing bitcoin’s largely uncorrelated nature, because it fell from 3 million at the peak late last year, to now above 1 million PHP.

That’s still less than the 72% fall in USD from $70,000 to $20,000, with it amounting to a 64% fall in pesos.

Where this specific question is concerned therefore in regards to whether the relative value of national fiat is reflected on bitcoin, then at least for this peso it appears that bitcoin could have provided some shelter from peso’s fall against the dollar, especially since June.

The relatively new nature of bitcoin however makes such fine analysis very difficult, because obviously if we zoom out more to 2013 when the peso was at 41, bitcoin has been a lot more than just a hedge.

Compartmentalizing that adoption level or bitcoin specific factors from global factors is probably impossible in generalized terms, but in sophisticated tools of professionals, there’s probably something they can do about the fact bitcoin has maintained its value by 8% more in pesos than in dollars.

That would be for financial houses in Philippines or that deal in PHP, that lubricate PHP commerce. Naturally until June they should have bought dollars, but since then and especially now?

That would depend on whether bitcoin has more to go down, something no one knows as it might just keep staying stable, or might even go up.

In the absence of full information one has to make judgment calls, and to take into account that lack of full information, one has to diversify.

Sure, hold some dollars, maybe even some PHP, but unless one is certain of which way they’re going, why not also hold some bitcoin for that 8% difference?

And if there is indeed such 8% difference, then bitcoin is obviously a hedge of sorts, just not a total or complete hedge which arguably doesn’t exist with reward and without risk.

When some claim therefore that bitcoin’s price fall proves it’s not a hedge, they may have more in mind buy and hold investors which should have a far longer time-view than a few months, in which case so far it has been far more than a hedge.

For sophisticated traders in shorter time-lines, it’s about percentages and minimizing risks. That needs some complicated models, with bitcoin just part of a far bigger equation to squeeze that 8%.

Such sophisticated models are in their infancy in US, and probably non existent in PHP as we then wouldn’t have such 8% considering the premium there over global prices appears to be just $100.

Arbitrage thus is working and well, because it is very easy to do and has been utilized since 2016-17. Grabbing the more hidden and moving ‘relative fiat value’ premium, however, probably needs more resources than just a laptop.

Which suggests it isn’t being utilized, and that presumably indicates it will be, with this nascent institutional adoption phase so potentially adding global efficiency.

Humans however may have an innate ability to ‘smell’ premiums, gut instinct as some call it, and thus bitcoin’s adoption in Philippines is ostensibly the second highest in the world as measured by volumes ratio-ed to the average wealth, the amount of wealth proportionally one puts into bitcoin.

That’s according to a ranking by Chainanalysis, which claims Vietnam is the biggest adopter.

For Philippines, a work like game, Axie Infinity, where you breed game NFTs to get rewards, may also have contributed to their higher adoption as 40% of players, which generated $1.3 billion in revenues last year, were reportedly based in the Philippines.

That adoption has grown to the point they now have a bitcoin island for tourists.

This is a country with a GDP of $361 billion, nearly twice that of Greece and not far off from Belgium. Making it not too small potatoes, especially when added to a class of likewise countries and currencies.

Countries that may benefit from a potential role of bitcoin in adding efficiency to their global fiat system, because as we are seeing it isn’t just bitcoin that is volatile. All these fiat monies are too.

So bringing the hedge back to bitcoin, at least potentially, especially at times when it isn’t too clear just which way currencies or the dollar should move.

At times like now when the dollar may well move higher, but at some point it may not and since no one can time that exactly, bitcoin may hedge.