As Britain voted to leave the European Union, the British seemed to split into two groups – those dissatisfied to see that their savings stashed in British pounds became 8 percent poorer and those delighted to feel an almost 9 percent jump in the value of their bitcoin holdings.
Many experts now share the opinion that Brexit can result in the decline of the Euro and in turn incredible boost of bitcoin. The event was rather predictable as political and economic instability grows in many regions of the globe.
“Bitcoin is effectively becoming digital gold,” said Ashvin Bachireddy, co-founder and general partner at Geodesic Capital, a Silicon Valley venture capital firm that backed bitcoin start-up 21 Inc. “You can continue to see further validation of bitcoin as something detached from a centralized government that allows people who work to preserve wealth in a secure way.”
Of course, neither Bachireddy, nor any other bitcoin experts will advise you to sell all your savings in favor of bitcoin as the cryptocurrency is still limited in how and where it can be used. However, it is high time to examine it closely.
Global Advisors Bitcoin Investment Fund (GABI) owner and former JPMorgan commodities strategist Russell Newton commented on the situation that will possibly be unfolding after the Brexit: “If – or when – we see the break up of the zone and the currency, I believe Bitcoin will fill some of the vacuum. Bitcoin’s inverse correlation to weakness in fiat currency regimes around the world has been seen many times and very markedly in the run up to the Brexit.”
According to Newton, bitcoin’s price will continue its upward movement in July while ether will become part of an “ecosystem of blockchain-based solutions”. “Bitcoin and blockchain offer a future filled with creativity, functionality and indeed use cases that we cannot yet conceive,” Newton added. “I believe that Brexit will invoke the feeling, at least in the UK, that bigger, structured, controlled and mandatory management is not the way forward, in politics, life or finance.”
Bitcoin has been pushing $700 after the voting in Britain completed while the cryptocurrency started the year at around $430. For the most part, bitcoin is believed to be a reasonable investment in countries with particularly strained economies, like Greece, Spain and Argentina. “If nothing else looks safe, you could see people looking to something completely different as a safe haven,” he said. “It doesn’t follow the ups and downs of regular markets.”
Jesse Powell, CEO of digital asset exchange Kraken, reveals that the Brexit vote doubled the volume of bitcoin trading just in 24 hours.
“There’s an advantage to having a currency that isn’t political, isn’t tied to a government and not subject to these kinds of things happening,” said Powell, whose San Francisco-based start-up enables the exchange of national currencies into cryptocurrencies. “It’s purely governed by math.”
While bitcoin is often called digital gold, it is necessary to admit that it can go much further than the precious metal. It can serve not only as an alternative asset for investment purposes, but can be easily spendable on everything from groceries to money transfers.