Forget Bitcoin’s Volatility, BoA Says Unstable UK Pound Like an Emerging Market Currency

Bitcoin’s often criticized for its volatile and unpredictable nature – now analysts are saying that, and more, about the pound sterling.

In a shock-inducing note to clients on Tuesday, currency analysts at Bank of America (BoA) said sterling had devolved into an emerging market currency in all but name during the four years since the U.K. voted to leave the European Union.

Sterling’s movements in the past four years has been “neurotic at best, unfathomable at worst,” said lead analyst Kamal Sharma, a notable GBP bear, in a report by the Financial Times.

Sterling’s spreads and implied volatility – the future range investors expect GBP to move in – remain far wider than other major world currencies, such as the U.S. dollar, euro or Japanese yen, and resemble something closer to the Mexican peso.

Uncertainty surrounding a future trade deal with the EU, as well as the possibility of negative interests, have also harmed investor sentiment, BoA said.

See also: UK Financial Watchdog Warns Crypto Firms to Register Before End of June

Of course, many say similar, and worse, about bitcoin. In a recent note to investors, JPMorgan said bitcoin might have staying power, but its trading patterns in the last few months showed it was still a “vehicle of speculation [rather] than a medium of exchange or store of value.”

Goldman Sachs actually advised its clients against buying bitcoin last month. Rejecting the idea it was even its own asset class, analysts said its lack of cash flow and high price volatility made it wholly unsuitable as a long-term investment.

Bitcoin’s volatility actually hit an eight-month low earlier this week, though some anticipate an imminent breakout as volatility returns. BTC options volumes on CME have increased markedly recently, with a series of call orders placed in the $11,000 and $13,000 range.

See also: Binance Launching Crypto Exchange in the UK

The BoA’s note on sterling comes as 21Shares, a Swiss-based product provider, launched the world’s first sterling-denominated crypto exchange-traded products (ETPs). In a press release, the company said the new products, set to launch on June 30, would provide U.K. investors with greater and cheaper access to digital assets.

CoinDesk asked 21Shares if a potential downgrade in sterling would impact their ETPs at all, with investors being dissuaded from buying a product that not only tracks a volatile asset, but is priced in another volatile asset too.

Laurent Kssis, 21Shares’ managing director, said it wouldn’t make much of a difference: U.K. enthusiasm for crypto products has been high, but the market has remained relatively untapped because investors first have to exchange into U.S. dollars, Swiss francs or euros in order to access them, adding additional frictional costs.

“Irrespective of volatility, GBP-denominated ETPs remove the FX risk factor and allow U.K. investors to better tap into crypto,” he said.