Amid the disastrous Brexit and rapid devaluation of the British pound, researchers discovered that a safe asset like bitcoin could have saved UK households US$1.5 trillion in total.
Credit Suisse, a multi-billion dollar Swiss financial company and banking group, recently revealed in an interview with CNN money that UK household wealth has declined by $1.5 trillion as a direct result of Brexit.
Almost immediately after Brexit was finalized, most financial investments and assets plummeted in value. The British pound reached a record low against the US dollar as well as other reserve currencies, decreasing from $1.5 to $1.2 within the span of 5 months.
The economic instability and financial turmoil in the UK triggered a domino-like effect on the country’s stock markets, as assets and stocks fell in value.
At the time, technology companies also expressed their serious concerns over losing a valuable user base and clientele in the EU. Several blockchain and bitcoin companies relocated to leading European countries including Germany and France.
Bitcoin as a Safe Haven Asset
An increasing number of financial analysts and consulting firms such as Bloomberg have emphasized the characteristics of bitcoin as a global safe-haven asset. Bloomberg TV stated that bitcoin was one of the three safe-haven assets of the world, apart from gold and Swiss francs.
Bloomberg also reported during Brexit that the demand for bitcoin surged before and after Brexit was finalized, as investors and traders sought for alternative assets to protect their wealth.
“I believe bitcoin has seen some of the benefits from the Brexit over the last few days as consumers are buying bitcoin as an asset uncorrelated with the global monetary system, much like gold,” Gil Luria, managing director at Wedbush Securities Inc. told Bloomberg.
In all, the financial and economic instability of the UK caused by Brexit caused households over $1.5 trillion in a total loss. Had these households stored their money and wealth in a safe haven asset like bitcoin or gold instead of cash and bank accounts, trillions of dollars in loss could have been avoided.
The decentralized nature of bitcoin allows users and investors to have full control over their money and it guarantees high liquidity and stable international exchange rates which enable quick and cost-efficient withdrawals.
Brexit and several other major economic changes including the election of Donald Trump, India’s denomination of certain banknotes, and China’s crackdown on wealth management products have proven the importance of an asset like bitcoin to a new group of conventional and traditional investors and traders.
With bitcoin becoming one of the very few safe-haven assets that is easily accessible to the public, it is continuing to be recognized as a stable store of value and gain mainstream adoption.
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Last modified: March 4, 2021 4:52 PM