Political and Economic Factors have time and again affected Bitcoin’s Price and the demand for cryptocurrencies, the latest one being no-deal Brexit. While the exact effects continue to be debated and delved upon, let us have a look at some of the politico-economic events influencing the demand of cryptocurrencies and Bitcoin price.
No Deal Brexit
Britain’s withdrawal from the European Union and the political conflict which ensues is unlikely to be solved any time soon. Interestingly, it might translate into substantial fortunes for Bitcoin investors.
UK’s pound and equity markets saw turbulence across August and early days of September. The Sterling and FTSE 100 plummeted as the October 31 deadline came closer. In an interesting turn, they suddenly displayed upward trends as the Parliament was suspended for a month to prevent MPs from creating any hindrance in the Brexit process.
Notwithstanding, the uncertain conditions prevailing over the past months, investors agreed to seek clarity, even if that meant leaving the EU without a deal.
Interestingly, through this period Bitcoin price has shown upward trends. While it remains 24% below June’s cyclical high of $13,930, it climbed back above resistance levels at $10,000 and stands at $10,616, at press time.
Nicholas Gregory, chief executive of the blockchain specialist, CommerceBlock, said he believes the turmoil caused by the Brexit debacle makes up for a strong investment case for Bitcoin. Undoubtedly, Bitcoin’s price has gone up as the Pound went South. He further alleged that no deal-Brexit can even trigger a major breakout for Bitcoin.
“The prospect of no-deal is already wreaking havoc across major fiat currencies, but if it happens we could see an unprecedented rally in Bitcoin with a surge past $20,000 a real possibility.”
Nigel Green, chief executive of financial consultancy compared Bitcoin to digital gold. He said,
“Bitcoin shares the precious metal’s key characteristics of being scarce and a store of value.”
He further added,
“The risks posed by the trade dispute … and other geopolitical issues, such as Brexit and its far-reaching associated challenges, will lead an increasing number of institutional and retail investors to diversify their portfolios and hedge against those risks by investing in cryptoassets. Under the current circumstances, I believe the bitcoin price could hit $15,000 within weeks.”
Hong Kong Protests
Cryptocurrency providers and companies played several roles in the protests. One of the few roles included advocating for transactional privacy and handing out cryptocurrency-financed supplies to protestors.
Genesis Block, a leading cryptocurrency ATM provider even provided Hong Kong protestors with water bottles and umbrellas on July 1st that were funded by international Bitcoin Cash donations. Furthermore, the bottles had a QR code that allowed recipients to donate more Bitcoin Cash in order to fund further supplies for peaceful protestors.
Per a Forbes report, as protests broke out around mid-June, Bitcoin was trading at $160 USD premium on TideBit, a Hong Kong-based exchange. It is interesting premium still persists, even as the protests have worn out.
The latest price of Bitcoin on TideBit is $11477.34 USD, about $150 USD higher than the current rate on Coinmarketcap.
While the volume of Bitcoin cash received was not a very large amount this initiative represents a tangible representation of how the international cryptocurrency community can affect conditions offline and engage communities.
Venezuela- Argentina Hyperinflation
It is not known that Argentina had a long history of inflation for more than 30 years. Reaching over some periods an inflation rate of 1000%. in 2018, the peso had lost 83% of its value compared to the American dollar. Bitcoin is coming up as a new way to save the capital of Argentinians. Undoubtedly, the economic crisis promotes more investments in cryptos.
In 2018, Siri, a crypto enthusiast living in San Francisco, advised counselor Luis Caputo, the former Argentinian Central Bank president, to invest 1% of his reserves in Bitcoin and to dedicate a part of the Argentinian nuclear power into mining.
More importantly, Argentina got talked about for its adoption of Bitcoin and hyperinflation in the prestigious G 20 Summit. Undoubtedly, Bitcoin is garnering attention and applause in the inflationary ecosystem and is being touted as the torchbearer of developmental opportunities.
With that being said, when we delve in the case of Venezuela, data from CoinDance, trading activity tracker on P2P exchanges Localbitcoins revealed that July 13 to July 20 saw the highest Bitcoin trading volume.
During that period, users on LocalBitcoins alone generated volumes of over 57 billion bolivars, beating the previous all-time high of 49 billion. This revelation came after Venezuela’s currency continued to suffer from runaway inflation, reportedly, it had reached 10,000,000%, leading citizens to resort to alternative means of storing value.
Moreover, the country’s official alternative, state-issued digital currency Petro, was declared a failure by a United States nonprofit.
While it is unlikely that geopolitical uncertainties will bring forth the best growth opportunities for cryptocurrencies, a global climate of trade wars and political instability is indeed harboring a fertile ground for a large scale and impactful crypto movement. It will not be wrong to concur that the high political instability will ultimately lead to cryptocurrencies being labeled as “safe haven”.