Britain’s unruly withdrawal from the European Union and the political dissolution that has been wreaked in its wake doesn’t appear likely to be unravelled any time soon – and bitcoin investors are among the best placed to benefit from this turmoil.
The UK’s pound and equity markets have seen some turbulent sessions across August and the early days of September. Both sterling and the FTSE 100 tumbled in August as the October 31 Brexit deadline loomed.
Both then turned upward sharply as Prime Minister Boris Johnson announced a prorogue – a suspension of parliament for a month to prevent MPs from hampering the Brexit process. It appeared that many investors, frustrated by the uncertainty of the past months, welcomed a bold move towards clarity – even if it meant that Britain would leave the EU without a deal.
However, it seems more volatile sessions are likely in the coming days as MPs – who have now overturned the government’s plans – debate on how they can stop a no-deal Brexit going through on the Halloween deadline.
Through this latter period, bitcoin has been stealthily regaining some momentum. Although it remains 24% below its June cyclical high near $13,930, it has climbed back above resistance levels at $10,000 to currently stand at around $10,530.
Nicholas Gregory, chief executive of the blockchain specialist, CommerceBlock, said he believes the turmoil caused by the Brexit debacle is making a strong investment case for bitcoin.
It’s no coincidence that Bitcoin has risen as the Pound has gone south. BoJo has helped Bitcoin rediscover its mojo.
He added that a no-deal Brexit could trigger a major breakout for the world’s leading cryptocurrency.
The prospect of no-deal is already wreaking havoc across major fiat currencies, but if it happens we could see an unprecedented rally in bitcoin with a surge past $20,000 a real possibility.
Bitcoin as Digital Gold
Nigel Green, chief executive of financial consultancy, agreed and sees bitcoin as a haven from recent geopolitical tensions, such as Brexit and the US-China trade war. He has likened the cryptoasset to digital gold, saying bitcoin shares the precious metal’s key characteristics of being scarce and a store of value.
The risks posed by the trade dispute … and other geopolitical issues, such as Brexit and its far-reaching associated challenges, will lead an increasing number of institutional and retail investors to diversify their portfolios and hedge against those risks by investing in cryptoassets. Under the current circumstances, I believe the bitcoin price could hit $15,000 within weeks.
Christel Quek, co-founder and chief commercial officer of bitcoin wallet Bolt.Global also commented on bitcoin’s recent period of stability saying cryptocurrencies were now entering the mainstream. She said:
The climate looks promising – blockchain technology has already managed to break into the orthodox financial systems, and crypto tokens have received substantial backing from mainstream businesses.
Uncertainties to Persist
But it’s likely that geopolitical uncertainties will deliver the most growth opportunities for bitcoin and other cryptoassets in the coming months.
Brexit is still far from over. And even if it does happen on the October 31 deadline, there’s likely to be months of turgid negotiations to provide further murk to the markets. This is without even considering the impact of ongoing trade conflict between the US and China. Nigel Green concluded:
A global climate of trade wars and political instability is proving fertile ground for cryptocurrencies and the broader crypto movement. An increasingly populist and politically unstable world is cementing the safe haven status of bitcoin and cryptocurrencies more generally.