After years of back and forth, planning and plotting, deals and no-deals, Britain will finally be leaving the European Union on Friday, January 31st. It is a topic that has divided not only the UK, and Europe, but many other across the globe, who wonder what effects will Brexit have on the markets, especially on Bitcoin.
The prediction is that the European, British, and global markets will make some kind of a move; up or down depending on which side of the fence you are on.
In the background, however, there is a seperate and decentralized financial market that is starting to grow in correlation to what happens in the traditional financial space.
Bitcoin’s position in a post-Brexit Britain and Europe will be of significance, probably more so than before, as the severing of the UK – one of FinTech’s biggest hubs – stems the free flow and easy movement of money, investing and transacting. Bitcoin suddenly looks to be an alternative for many who would be negatively affected by Brexit.
More so, Bitcoin could profit from Brexit as the general feel is that it will affect investments in Europe which will push people to look for alternatives, which Bitcoin is starting to position itself as.
For Britain, and its cryptocurrency sector, this separation from Europe could also be of big benefit because, generally speaking, Britain is more friendly and accepting of Bitcoin than Europe.
Looking elsewhere
It has already been demonstrated that Bitcoin has the potential to be a hedge in difficult financial times. The US-China Trade war, the US-Iran conflict, even the European Central Bank’s dovish turn, all of these factors positively impacted Bitcoin’s price as investors looked for a hedge that was not gold.
Recently, in fact, Bitcoin has been operating more like gold in terms of its correlation, which could be an indicator that investors are starting to stock up on digital gold.
With Brexit being seen as a short-term financial handbrake, British investors could easily start turning their attention to the digital currency instead of European investments which will start to become less attractive and harder to operate.
That being said, the price boost may only be small since British investors only make up a small portion of the global figures in relation to Bitcoin investments.
William Thomas, CEO of the peer-to-peer exchange Cryptomate, explained:
“I would expect to see some upward movement on BTC/GBP markets shortly after the deadline, but since the British pound is a small portion of global crypto volume it may not have a large overall effect on price as some have predicted.”
“It will, however, have a positive impact within the British market, but the degree to which this will affect the global cryptocurrency markets is speculative at this time”.
Good for Britain’s Bitcoin space
Where Bitcoin could really benefit from Brexit is related to the burgeoning cryptocurrency ecosystem and the companies being created in the industry. In Europe, certain countries are known for their friendly approach – such as Switzerland. But, overall, the European Union is quite suspicious when it comes to crypto innovation.
This was evident when both France and Germany quickly put up their walls to block the growth and expansion of Facebook’s Libra in Europe. Meanwhile, The UK has been seen as a lot more progressive and wants to actively encourage FinTech to blossom on its shore.
With Brexit, there will be a chance for the UK to build up its own independent framework for cryptocurrency businesses and for it to even push as a leader in the next technological revolution.
Thomas concluded:
“It’s my personal belief that Brexit would be a huge positive for the UK cryptocurrency industry in the long term, as it enables us to create our own regulatory systems without interference from the EU – who are much less friendly to the industry as a whole compared to the UK”.
