Theresa May and the U.K. parliament are 9 days away from deciding upon the fate of the country in regards to Brexit, a decision that could have widespread and impactful results for the price of Bitcoin.
According to Jefferson Nunn, analyst and contributing author to Forbes, a no-deal Brexit decision will ultimately have the largest effect on Bitcoin. In terms of how the U.K. can handle its withdrawal from the European Union, a no-deal decision would result in the immediate withdrawal of the United Kingdom from the EU, with no negotiations in place to determine what that relationship would be like moving forward. Such a decision would lead to a massive disconnect in border flow between the UK and its European counterparts, leading to a disruption in trade and the ease of which people are currently able to travel.
If a no-deal goes through, Nunn predicts that the U.K. will enter a hyper-inflationary market, conditions that cryptocurrency has typically thrived under (look no further than the adoption of crypto in Venezuela and Argentina). Nunn continues,
“Unemployment will rise, the already strained UK central bank will be forced to “print cash” and Bitcoin will rise against the Pound.”
In addition to raising the value of Bitcoin against the British pound, Nunn finds it likely that cryptocurrency will find a favorable exchange rate against the Euro. The U.K. ranks 5th in terms of world economies, contributing a significant portion to the economy of the European Union. Brexit would cause a dramatic shift in the economic output of the EU, including the interchange between member countries such as Germany with the United Kingdom going forward, thereby contributing to the Euro’s decline against BTC.
Nunn also cites the contribution of the most recent bull run for Bitcoin and cryptocurrency, which is now caught inexorably with the proceedings of Brexit. Fears over the state of both the British Pound and E.U. Euro have likely contributed to the sudden investment in BTC. In a bizarre twist of fate, cryptocurrency may prove to be more price stable in the coming months than the market uncertainty that is being imposed over the Brexit ordeal. Decisions made in the coming weeks will contribute further to the price change of Bitcoin, however the groundwork built for BTC pricing throughout 2019 is already significantly different than that of the previous year.
December 2017 brought about a bullish sentiment and exponential price increase for cryptocurrency that was driven primarily by FOMO and hyper-inflated investor expectation. To put simply: cryptocurrency was not ready for the flood of capital that entered the market at the end of 2017, with adoption lagging behind valuation. Predictably, market prices tumbled in the following months, leading many analysts to refer to 2018 as the “crypto winter.”
The first quarter of this year has painted a different story for cryptocurrency, with figureheads and companies pushing adoption and industry growth ahead of price speculation. Brexit could force Bitcoin prices higher as both individuals and firms alike look to the usability of cryptocurrency as a more attractive means of currency than the uncertainty of their fiat alternatives.
At the very least, the next several weeks should prove to be even more exciting for cryptocurrency, and set the stage for potential BTC breakout adoption if the Pound and Euro falter.