In times of uncertainty❓will we have a "Bitcoin Milkshake"🥤?

9 de out. de 2023

Introduction

The objective of this study is to compare the appreciation of the world's main currencies, with Bitcoin as its main focus.
For this, 34 currencies were selected, 31 of which were fiat currencies, 2 metals (gold and silver, which were previously used as currency and store of value), and Bitcoin.
The selection was made based on the trading volume and representation of each currency on the world stage.

The dollar was taken as the unit of measurement for comparison purposes.
To compare the dollar itself against other currencies, the DXY index (Dollar Index), the WCU (World Currency Unit) and the XDR (Special Drawing Rights) were used.

The DXY is an index that represents the strength of the dollar against a basket of currencies, with the weight of each currency being calculated based on bilateral trade with the USA. The currencies that make up the index are: Euro (EUR), Japanese yen (JPY), Pound sterling (GBP), Canadian dollar (CAD), Swedish krona (SEK) and Swiss franc (CHF).

The WCU is a basket of currencies representing the 20 largest economies in the world, while the XDR is a basket of currencies representing the 5 largest economies in the world. Both baskets are calculated by the IMF (International Monetary Fund).

WCU is made up of the following currencies: USD, EUR, JPY, GBP, CAD, AUD, MXN, KRW, CHF, CNY, BRL, RUB, INR, TRY, ZAR, HKD, SGD, SEK, NZD and SAR.
The SDR is not a currency, but its value is based on a basket of five currencies: the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.

Context

The financial market is constantly influenced by economic, political and social factors.
As the world goes through periods of uncertainty, investors are looking for assets that can protect their capital and guarantee solid returns.

There is a phenomenon known as the "Milkshake Dollar Effect", which refers to the tendency for the US Dollar to appreciate in relation to other currencies in periods of liquidity crisis.

The graph shows that in this period YTD (Year to Date) Bitcoin was the currency that appreciated the most in relation to the dollar.

Despite this, the scenario we are going through is unprecedented, and there is no way to predict what will happen.
What we can do is analyze what happened in the past and try to draw some conclusions.

Bitcoin was created in 2009, and since then it has been a very volatile currency.
In 2017, Bitcoin appreciated by 1,318% against the dollar, and in 2018, it depreciated by -73.5%.

But aside from the price fluctuation part, Bitcoin's biggest advantage is that it is not controlled by any government or financial institution, and is therefore resistant to inflation and price manipulation imposed by politicians.
Try making a money transfer to another country using the SWIFT system without paying absurd fees and without bureaucracy, and you will understand what I'm talking about.

But now, in this geopolitically delicate period full of uncertainty, will we have a "Bitcoin Milkshake"🥤 effect?

Currencies

The following currency pairs (and some indices) have been inserted into the chart:

1. BTCUSD
- Name: Bitcoin
- Country: ?

2. GOLD (XAUUSD)
- Name: Gold
- Country: Various

3. SILVER (XAGUSD)
- Name: Silver
- Country: Various

4. DXY (index)
- Name: Dollar Index
- Country: FED (Federal Reserve) - United States

5. USDWCU
- Name: US Dollar vs World Currency Unit
- Country: WOCU - United Kingdom

6. USDXDR
- Name: US Dollar vs XDR
- Country: IMF (International Monetary Fund) - United States

7. EURUSD
- Name: Euro
- Country/region: Eurozone

8. GBPUSD
- Name: British Pound
- Country: United Kingdom

9. CHFUSD
- Name: Swiss Franc
- Country: Switzerland

10. JPYUSD
- Name: Japanese Yen
- Country: Japan

11. SEKUSD
- Name: Swedish Krona
- Country: Sweden

12. CADUSD
- Name: Canadian Dollar
- Country: Canada

13. NOKUSD
- Name: Norwegian Krone
- Country: Norway

14. PLNUSD
- Name: Polish Zloty
- Country: Poland

15. KRWUSD
- Name: South Korean Won
- Country: South Korea

16. NZDUSD
- Name: New Zealand Dollar
- Country: New Zealand

17. SGDUSD
- Name: Singapore Dollar
- Country: Singapore

18. TWDUSD
- Name: Taiwan Dollar
- Country: Taiwan

19. AUDUSD
- Name: Australian Dollar
- Country: Australia

20. INRUSD
- Name: Indian Rupee
- Country: India

21. CNHUSD
- Name: Chinese Renminbi
- Country: China

22. CNYUSD
- Name: Chinese Yuan
- Country: China

23. HKDUSD
- Name: Hong Kong Dollar
- Country: Hong Kong

24. MYRUSD
- Name: Malaysian Ringgit
- Country: Malaysia

25. ARSUSD
- Name: Argentinian Peso
- Country: Argentina

26. SARUSD
- Name: Saudi Riyal
- Country: Saudi Arabia

27. ILSUSD
- Name: Israeli Shekel
- Country: Israel

28. IDRUSD
- Name: Indonesian Rupiah
- Country: Indonesia

29. TRYUSD
- Name: Turkish Lira
- Country: Turkey

30. ZARUSD
- Name: South African Rand
- Country: South Africa

31. BRLUSD
- Name: Brazilian Real
- Country: Brazil

32. CLPUSD
- Name: Chilean Peso
- Country: Chile

33. UYUUSD
- Name: Uruguayan Peso
- Country: Uruguay

34. MXNUSD
- Name: Mexican Peso
- Country: Mexico

35. COPUSD
- Name: Colombian Peso
- Country: Colombia

36. RUBUSD
- Name: Russian Ruble
- Country: Russia