British Prime Minister Theresa May is trying her damnedest to convince opposition MPs in the Labour Party to sign off on her proposals for a Brexit. A series of impasses has created gridlock within Parliament for a favourable outcome vis-a-vis a divorce from the European Union. Prime Minister May is desperately trying to extend the Brexit deadline until later on in the year.
Until the House of Commons can back measures proposed by her, the picture is looking increasingly gloomy. Unfortunately, the EC President Donald Tusk has mandated that all EU countries sign off on an extension first.
Naturally, the impact of such political buffoonery is devastating when it comes to confidence in the GBP. Prime Minister May is hard pressed to come up with a deal that will satisfy the opposition Labour Party under Jeremy Corbyn. PM May is dutifully attempting to carry out a mandate to lead Britain out of the EU. Sadly, her best efforts have been met with fierce resistance by MPs.
Defeat has come time and again to each of May’s proposals, leaving many in government and on the sidelines scratching their heads. Several important meetings lie ahead, with the Brexit deadline possibly being postponed to accommodate UK lawmakers. If the House of Commons vote for a deal, it’s likely that October 2019 will herald the official divorce between the UK and the EU. It’s a longshot to say the least. European Parliament elections are slated for May 23-26, 2019, and there’s plenty of work to be done in the interim and beyond.
European Union states will be advancing their candidates and voting in these elections. All sorts of issues come into play, such as the question of Britain’s participation, Britain’s involvement in the EU, and the rise of the pro-Brexit movement under Nigel Farage. One common denominator in all the hullabaloo is the shift away from fiat currency towards cryptocurrency, notably Bitcoin.
Navigating the Turbulent Waters of Cryptocurrency
Bitcoin and the cryptocurrency market in general have endured tumultuous times in recent months. The world’s premier digital currency is now trading above 3,800 GBP ($5,000) per unit, marking a significant uptick in its 50-day moving average and its 200-day moving average price. The Internet is aflutter with talk of ‘Bitcoin and Brexit’ and the correlation is coming into sharp focus. Various cryptocurrency exchanges are making their way to market as Bitcoin continues its stellar run of form.
The prospect of a no-Brexit deal a.k.a. a Hard Brexit is none too comforting for the UK and the global economy. With no plan in place, trade agreements between the UK and the EU will be relegated to default World Trade Organisation presets, unsettling the UK’s status as the hub of commercial and financial enterprise in Europe. Registrations in trading activity at leading cryptocurrency exchanges have increased in recent months. This does not come as a surprise, given the real concern regarding Britain’s future.
In times of uncertainty, traders and investors routinely seek out safe-haven assets to plough their funds into. In this particular case, several options abound, notably gold bullion, gold shares, government bonds and alternative investment paradigms such as Bitcoin. It is the latter financial instrument which is now experiencing significant growth prospects. A hyper-inflationary situation in the UK coupled with rising unemployment is seen as the worst-case scenario for a no-deal Brexit. This invariably impacts the GBP and can spill over to opposition currencies.
The sheer weight of UK economic enterprise as it relates to the EU’s prosperity cannot be underestimated. While some may argue that there is nothing more than a spurious connection between the GBP and BTC, both are now considered viable financial instruments in a mainstream global economy. In times of crisis, people invariably flock to options they believe will stabilise their financial situation. In this case, BTC has shown that it has some steel as it continues to prop up the entire cryptocurrency market valued at $180 billion. With a circulating supply of 17.6 million BTC, a notable rise in the value of Bitcoin effectively pulls the entire market higher.
A Bad Brexit Is Bullish for Bitcoin
Thanks to a global community of adoptees, Bitcoin and crypto are here to stay. The cryptocurrency market is largely influenced by sentiment. Bitcoin behaves in a similar fashion to gold bullion in that uncertainty tends to generate rallies in this contrarian asset choice. Cryptocurrency in general will continue to rise in value against fiduciary currencies like the US dollar, British Pound, Euro, Swiss franc, Japanese yen, South African Rand and Venezuelan Bolívar.
The world’s pre-eminent economists, traders and investors have been chiming in on the issue. A certain degree of consensus has been reached regarding how Bitcoin and crypto will perform in the event of a Hard Brexit. A no-deal Brexit is bullish for Bitcoin.
While 2019 has been less than a spectacular year (to date) for cryptocurrency, it has been a year of consolidation. That much is already evident with various cryptocurrency exchanges opening up all over the world and witnessing dramatic trading activity. Speculation will certainly play a big part in Bitcoin’s volatility this year and crypto traders are okay with that.
Cryptocurrency assets are inherently more volatile than traditional Forex trading, but this has not swayed people from buying into this market. A breakout may well be on the cards for Bitcoin, and this will prove to be a welcome change from the ‘crypto winter’ which the market experienced in 2018.