Speculative attacks - the for-profit shorting of a foreign currency - are widespread throughout history.
- 🇬🇧 George Soros & Black Wednesday (1992): Soros bet against the British pound, forcing the central bank to leave the fixed-exchange-rate ERM and devalue the pound, making over $1 billion in profit.
- 🌏 Asian Financial Crisis (1997-1998): Speculators attacked the Thai baht, leading to its devaluation and a domino contagion effect on other Southeast Asian currencies (Indonesia, South Korea, Malaysia).
- 🇲🇽 Mexican Peso Crisis (1994-1995): A devaluation in the peso triggered this speculative attack as investors sold their peso-denominated assets. This loss of confidence forced Mexico to accept a U.S./IMF-led bailout and led to widespread contagion in other emerging markets.
- 🇷🇺 Russian Financial Crisis (1998): Low oil prices and high debt-fueled a speculative attack on the ruble, causing it to plummet and leading to a severe recession and sharp increase in inflation.
- 🇦🇷 Argentine Currency Crisis (2001-2002): An unsustainable fixed-to-the-dollar exchange rate system led to a speculative attack on the peso, resulting in a 70% devaluation and economic crisis.
Bitcoiners have long (since 2014!) speculated how Bitcoin will eventually be leveraged to perform a speculative attack, as we all know that good money drives out the bad money.
We recently summarized a classic Bitcoin piece that talks about what a speculative attack is and how Bitcoin can be used in such - in this 2-minute summary of Speculative Attack (2014) www.2minutebitcoin.org/blog/bitcoin-speculative-attack-on-the-dollar-2014