The UK withdrawal from the European Union, or ‘Brexit’ has hit headlines over the past few days with two prolific members of the UK Government resigning from their positions as a result of a disagreement between policies going forward that will help to decide which path the UK will take after it leaves the EU.
Whilst we don’t want to get into politics, this shake up of the cabinet does seem to be a sign of things to come.
We want to estimate how this will impact Bitcoin.
If we analyse the trajectory of Bitcoin during the EU Referendum in the UK (the period during which leave EU and remain in EU parties campaigned) we can see that the value of Bitcoin raised. This is no doubt due to investors wishing to invest in Bitcoin to protect their assets in case of a crash of the GBP as a result of the brexit result. Once the result was announced on the 23rd of June, the value of Bitcoin sunk.
Image sourced from coinmarketcap.com
The big dip on the chart came at the same time as the result was announced, so this is hardly a coincidence.
What will happen when the UK actually leaves the EU? Well, we expect that a similar trend will occur. People are likely to pump their GBP into Bitcoin in order to protect it against a GBP crash that could very well be caused by EU withdrawal. In this instance we will see the value of Bitcoin drive upwards. Then, we are likely to see the value of Bitcoin drop again, that’s if history is anything to go by.
Ultimately we can’t predict what will happen, but we do believe that Brexit will cause a shake up in the markets. Bitcoin will see the brunt of this, there’s no doubt about that.
For now though, we can’t even predict what Brexit will cause overall, never mind within the crypto markets specifically.