Britain has officially left the European Union (EU) on Friday, January 31, ending a three-year wait. But how will the Brexit transition period impact Bitcoin price?
The breakup is official: On January 31, 2020, at 11 pm local time (6 pm ET), the United Kingdom left the European Union. Its exit from the world’s largest trading bloc brings hope and fear to British citizens. Uncertainty surrounds the exit ordeal and in this Bitcoin is expected to shine. Although Britain has exited the EU, they are far from the end of their negotiations. Trade negotiations are expected to continue until the end of the day.
Bitcoin price rallies in times of economic uncertainty
Brexit Is Finally Here – Will Bitcoin Price Rally?Recent years have shown growing evidence that Bitcoin is a useful and active investment vehicle in times of economic uncertainty. Bitcoin price rallies as investors are looking for ways to keep their money separate from the unknown impact of governments and the negative situation in the ordinary capital and consumer markets.
For example, the flagship cryptocurrency is increasingly used in countries in severe economic crises, such as Venezuela.
Last week, this was evident as Bitcoin price spiked above $9,500 during the worst single-day performance on the U.S stock market since October. This was as a result of growing fears about the Coronavirus that has claimed the lives of more than 250 people in mainland China and continues to spread across the world.
This virus has been reported to have spread to over 40 countries and infected over 10,000 people. It has also brought the Chinese economy, where it originated, to a standstill. If it continues to spread and strangle economies, it will fuel the price of Bitcoin.
The crypto community has on Twitter shared their optimism about the future of Bitcoin in regards to Brexit.
Is Brexit bearish or bullish for cryptocurrencies?
In Britain, there is great economic uncertainty. Although the EU has stated that Britain will always be a friend, it will act fairly in its trade deal. For the past three years, the EU has been rejecting Britain’s proposed trade deals. In fact, Britain was on the brink of exiting the EU without a trade deal.
As Britain goes back to the table, there is no assurance that a trade deal will get done and with the EU not budging on its preferred deal, there is also no telling how fair it will be. Britain’s exit could come with great economic ramifications.
The ball has not dropped yet for Britain. The country still has a year to try and make away with a good deal that does not impact its economy. But this phase, which the PM Boris Johnson called ‘the moment when the dawn breaks, and the curtain goes up on a new act in our great national drama,” promises to be a time of fear and panic, a sweet spot for Bitcoin. And yet another reason to be bullish on Bitcoin in 2020.
Conversely, the crypto markets have been bullish for the first month of 2020, so Brexit could be the catalyst to knock the wind out of the sails so to speak and cause a bearish reversal. Earlier this week the crypto markets crossed a psychologically significant barrier of $257 billion, ending a 7-month downtrend. The crypto markets currently sit at $262 billion, although Brexit may cause investors to flee to safer assets.