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Economic hardship, whether driven by trade wars or political divisions, usually drives investors into safe haven assets. It has been the case for gold and Bitcoin this year as currencies get crushed and recession fears loom. Britain’s Brexit woes may spell short term doom for the fintech industry but it is likely to have the opposite effect on Bitcoin.
As the deadline for Britain’s exit from the European Union approaches, the political squabbling has intensified. The infighting between politicians wanting to remain and those wanting to leave the EU has gone on for three years causing more economic damage and uncertainty than the event itself.
The media is also clearly divided as is the population. Forbes has sided with the purveyors of FUD claiming that Brexit will cause a ‘Bitcoin and blockchain nightmare for London’ in its latest article. It added that increasing regulations and the impending departure could spell doom for blockchain and crypto startups that emerged onto the vibrant London fintech scene a couple of years ago.
This week the UK’s new prime minister, Boris Johnson, battled with rivals as well as members of his own party over the possibility of a ‘no deal’ Brexit further fuelling uncertainty for businesses. The possibility of limited access to the European corridor has sent shockwaves through the fintech and blockchain industry. Many startups may simply shut up shop in London and move to friendlier nations offering easier trading access and relaxed regulations.
Changing Europe research group spokeswoman, Sarah Hall, pointed out;
“If fintech businesses in the U.K. can’t access international individuals working in areas such as machine learning, artificial intelligence and blockchain as easily after Brexit, this could cause a contraction in the sector because currently, up to a fifth of the skills used by the fintech sector in the U.K. have come from the EU,”
While the blockchain industry may suffer from a no deal Brexit, it would be inaccurate to suggest the same will happen to Bitcoin. If anything BTC is likely to get a boost from UK based investors looking to hedge against their own currency which has been depreciating since the Brexit debacle began.
The GBP hit fresh lows this week following escalating political tensions in London’s houses of parliament. A low of $1.19 was hit against the USD earlier this week marking its lowest level for a decade according to XE.com. The pound was equally weak against the Euro dropping to 1.09 on Tuesday.
Collapsing currencies is usually good news for Bitcoin as we have seen countless times elsewhere on the planet.Image from Shutterstock