Whilst the traditional currency markets react to Brexit implications and related financial news, Bitcoin and Ethereum skyrocketed in price.
The United Kingdom’s vote to leave the European Union shocked the global currency markets. Following the 23 June 2016 referendum, the value of sterling fell to a 31-year low. Almost overnight the pound dropped around 10 percent against the dollar, as traders and investors reacted to the economic uncertainty following the result.
As the ‘leave’ win sent global equity markets tumbling, stunned investors attempted to safeguard against the implications, by seeking shelter in the so-called safe haven assets, including gold, government bonds and certain currencies. Gold in particular hit a 2 year high following the vote, rallying as much as 21% in early trade.
Post-brexit expectations for cryptocurrency
These recent developments are bringing fresh investor attention to the potential of bitcoin and other cryptocurrencies, with a more optimistic expectation than ever before. Despite its volatility, bitcoin seems to be offering a small escape route for those who do not wish to be caught up in the financial turmoil of the traditional currency, and with inflation on the rise in the UK, the benefits are starting to outweigh the risks even for the more conservative investors. Although mainstream investors will always jump on safe heaven assets, gold in particular, during times of hyper volatility, bitcoin is now a clear and promising alternative. Furthermore, there is still untapped potential. Last December, the Danish Saxo Bank published a forecast report placing a possible value of bitcoin at $100,000 in the next 10 years. This so called “Outrageous Predictions” forecast was made when bitcoin was trading at around $754. More recently, in an interview with CNBC, Saxo Bank analyst Kay Van-Petersen, predicted that in 10 years the market capitalisation could reach $1.75 trillion, making each bitcoin worth $100,000.
It appears, that Brexit and the related financial trends, could fuel a more widespread adoption and integration of digital currencies and boost their growth even further in the foreseeable future, in the UK and globally.