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After three and a half years of a deadlock, the Britain-Brexit breakup is official. The UK officially left the European Union at 11 pm on Friday, January 31, 2020, making it the first member state to ever depart from the bloc.
While this political separation is a huge feat for the UK, it raises so many questions about the economy of the country post-Brexit. In particular, the UK has departed without a deal which is likely to reduce investors’ confidence in the pound. As such, these investors will be looking to hedge their depreciating currency with non-correlated assets like bitcoin.
The UK Officially Departs From The EU
Although the UK has officially departed from the EU, the Brexit debacle is far from over. Speaking hours after the departure, Prime Minister Boris Johnson posited that “this is not an end but a beginning,”. He added that it is “the moment when the dawn breaks and the curtain goes up on a new act in our great national drama.”
So many things are about to change for Britain. First off, all the United Kingdom members of the EU parliament will automatically lose their seats. This means that Britain will not have any reasonable representation in the EU and will not participate in any EU leaders’ meetings. But, the UK will still be expected to follow EU rules.
Also, the UK and EU have until December 31, 2020, to formulate a free trade deal between them. Simply put, Britain will have a transition period of 11 months where it will work towards its trading relationship with the EU in the future.
Notably, there is no guarantee that a comprehensive trade deal will be hammered out within the eleven-month period provided. What this means is that there is a high chance of no deal at the end of the year. Such a scenario is likely to spell doom for the UK economy.
Will Bitcoin Again Shine As A Safe Haven Asset?
Despite being a little over a decade old, bitcoin has shown strong signs as a safe haven asset during global turmoil. For instance, as the deadly coronavirus rampaged through China last week, the price of bitcoin skyrocketed alongside that of gold. The US stocks, on the other hand, registered one of its weakest performances in months, with investors being spooked by the epidemic.
The virus has spread to many countries across the world, including Britain where two cases were confirmed by the Department of Health and Social Care. As things stand now, the death toll has surpassed 250 and approximately 11,000 confirmed cases. If the situation continues, bitcoin is poised to avail.
Bitcoin recently broke above the 200-day MA which has historically been followed by exponential gains. The top cryptocurrency is currently trading at $9,382.65, up by 0.91 percent on the day. Britain exiting the European Union could drive the price even higher as the Brits turn to bitcoin as a safe haven amid the growing uncertainties.