Europe’s Bitcoin Market Prospers While British Economy is Declining
By definition, a safe haven asset is an investment that is expected to retain its value or even increase its value in times of market turbulence. Because of bitcoin’s decentralized nature, bitcoin has long been considered as a safe haven asset, with many investors describing the digital currency as “digital gold.”
In 2016, physical gold recorded a decline in value throughout the year, while Bitcoin showed an astonishing growth rate, increasing from $430 to $950, by over two-fold, within 12 -month period. In consideration of bitcoin’s ability to retain its value amidst financial instability and economic uncertainty, the vast majority of new investors have started to build a portfolio of bitcoin as a long-term investment and hedge against the unstable economy.
Earlier this month, the Bank of England, the central bank of United Kingdom, slashed its growth forecasted for the second time in 2017, mainly due to the backlash from Brexit, or the UK’s exit from the European Union. Mark Carney, the bank’s governor, stated that the “speed limit” of the British economy has slowed, with other economic indicators such as jobs growth declining as well.
Recently, Executive Director of the UK Employment Confederation (REC), Kevin Green, revealed that Brexit has caused a significant decline in talents and professionals, leaving the UK with too many jobs but not enough workers. Green told CNN Money:
“The parts of the economy most reliant on European workers are under even more pressure as many EU workers return home. Employers are not just struggling to hire the brightest and the best but also people to fill roles such as chefs, drivers and warehouse workers. We can’t ignore the importance of our relationship with the EU to employers. If we want to keep our jobs market successful and vibrant, we must make it easier, not harder, for employers to access the people they need.”
Therefore, UK’s declining economy, worsening economic indicators and decreasing economic growth forecast by the Bank of England have had evident effect on the British pound, along with the country’s stock markets.
Similarly, following the Bank of England’s growth forecast and US President Donald Trump’s promise of “fire and fury” against North Korea, US stocks sell-off continued on the FTSE 100 Index, a share index of the 100 companies listed on the London Stock Exchange.
In the same vein, IG market analyst Josh Mahoney told FT. “European stocks have stabilised after this morning’s fear-fuelled deterioration in response to heightened fears of a US-North Korea conflict. Although the stock markets have regained some ground, concerns clearly remain over the potential of conflict.”
Despite the struggling economy of the UK, the European bitcoin exchange market has grown rapidly over the past few weeks, taking over the South Korean bitcoin exchange market, the fourth largest bitcoin market, at one point.
According to several bitcoin market data providers such as BraveNewCoin, Europe accounts for 8 percent of global bitcoin trading, processing around $70 million worth of bitcoin trades on a daily basis.
It is a fact, the towards bitcoin from institutional investors, accredited investors, traders and users in the UK and Europe is exponentially increasing and such rapid rise in demand is likely caused by an emergence of investors attempting to avoid or bypass the current economic instability of the UK with bitcoin.
Some analysts, including IHS Markit economist Raj Badiani suggest that the UK will continue to suffer an economic slump throughout 2017. He added: “[The slump] was partly triggered by the start of a more subdued phase of consumer spending, with increased household stress pushing back the recent gains of several years of high employment and improved purchasing power over much of 2016.”
In summary, while the economy in the UK is declining because of political events, bitcoin is expected to be widely accepted by users and investors who perceive it as a safe asset. New announcements are expected.
Disclaimer: This press release is for informational purposes only. Information does not constitute an investment advice or an offer to invest. The opinions expressed in this article are those of the author, they do not necessarily represent infocoin views and should not be attributed to Infocoin.