The Brexit Deal, a Tumbling Pound, and a Ceaseless Crypto Bloodbath
At long last after two-and-a-half years of negotiations in a painful process that can only be described as watching a slow-motion train wreck, a Brexit deal has been struck–a tentative one, at least. However, instead of cracking open the champagne, the pound has tumbled against the dollar, ministers are resigning left and right, and Theresa May’s position looks more uncertain than ever.
In a lose-lose deal all round that bears all the hallmarks of the economic woes on the nearing horizon, there is no one celebrating what constitutes a ruthlessly brutal losing position for the UK. Rather like the growing hash war, factional fighting, and uncertain outcome of Bitcoin Cash and the crypto market in general.
The remainers remain indignant, and the die-hard Brexiteers who voted to leave the EU feel betrayed. They’re far more likely to lose from this deal than had they decided to keep the status quo–something vaguely reminiscent of the Bitcoin Cash fiasco.
A Raw Brexit Deal All Round
However, the UK’s decision was doomed to failure from the very start. Revealing its weak hand from the beginning, and lead by a negotiator about as convincing as a US ex-President uttering “I did not have sexual relations with that woman.”
Indeed, the draft deal denies Brexiteers the illusion of a quick clean break from the EU and the notion that a new trade deal would be in place by 2019.
Although it has to be said, those who were under the illusion that Britain had any cards to play in this hand were clearly deluded.
Unwinding nearly four decades’ worth of trading, economic and legal ties was never an easy task. And Mrs. May handled it with all the grace and dexterity of an elephant dancing the Nutcracker. She leaped from one calamity to another making onlookers wince at the carnage.
Had she hoped to divide the 27 countries participating in the EU block she was sorely disappointed. The Brussels negotiations led by Michel Barnier made it clear from the start that the UK would not be able to “cherry pick” benefits with each separate member.
If those who voted to leave really believed that the UK could carry on in harmony with the EU and the government and the public could get over their divisions, they were living in a fantasy world.
When you have factions opposed to an upcoming action, it does not bode well for the outcome, for peace, or for the markets, whether traditional or crypto.
The Economic Implications of the Deal
Against this gloomy backdrop that only goes to show how inferior the deal of leaving is to remaining, the UK will be separated from its most important trading partner. The country will have less say than ever before on key policy. And the economic consequences could be described as disastrous at best.
The divorce settlement will cost the UK an eyewatering €40bn-45bn. There will be a 20-month standstill transition period that will only serve to fuel uncertainty for businesses, and a backstop for the contentious Irish border issue. This will ironically keep the UK embroiled in the customs union for years–when the very purpose of leaving was to control its own borders.
Should the deal pass (something that’s looking less likely on Thursday morning as a vote of no-confidence may unfold) uncertainty will hardly be removed. The public is overshadowed by the limbo that the UK finds itself in once more.
A clear position on the ramifications of Brexit for individuals and business alike is unlikely to emerge until late 2020. This will keep businesses with their hearts in their mouths and fuel market uncertainty further.
Division Inside the Ranks
Just as it’s unlikely that the UK will return to the EU (just imagine Roger Ver and Jihan Wu welcoming Craig Wright and Calvin Ayre back into the fold), division in the ranks is a certainty. As the miners and the hash war has shown the clear division in the Bitcoin Cash ranks, on Thursday, key British MPs began to resign, most notably Esther McVey and Dominic Raab.
Mr. Rabb was appointed as Brexit Minister upon the resignation of David Davis this summer that already caused a severe blow to the Tory party. He cited in his resignation letter that he could not support a deal that left the Irish border exposed and the UK at the mercy of the EU being able to veto their exit decision.
One Eurosceptic MP described Mr. Rabb’s resignation as “the end game” for Mrs. May’s leadership, adding:
“If the guy who was supposed to be leading it can’t support it, then how can MPs or the country. It’s a horror show. There’s no way back. She has just got to go. This is an epic fail.”
Other ministers were talking about “turmoil,” a “bloodbath,” and “casualties,” very similar to that of the crypto world right now. Despite the US Federal Reserve citing crypto as not even a blip on the radar of traditional finance, its markets are equally sensitive to external geopolitical forces.
The Pound Takes a Tumble
The pound dropped sharply upon the news of Rabb’s resignation by 1.1% wiping out its rebound in the last two sessions. Northern Ireland Minister Shailesh Vara also resigned on Thursday morning upon the news.
Even the Prime Minister herself said that there were “difficult days ahead,” and that she expected plenty of backlash, concluding that it was the “best that could be negotiated,” further highlighting the erroneous decision from the get-go.
The Crypto Market Bloodbath
Mrs. May still has to get her own government to accept the deal. And with a hardline of MPs against the Prime Minister and key figures resigning left and right, this is far from certain. Not to mention the fact that the UK has pretty much lost all confidence in its country’s leader.
But if Theresa May thought she was having a bad day, at least she’s in good company. Over the last 24 hours, the crypto market has lost over $26 billion, in one of the worst selloffs of 2018.
Bitcoin Cash’s ongoing civil war will reach its conclusion today and we’ll know for sure whether two separate blockchains Bitcoin ABC and Bitcoin SV will emerge.
Whatever the outcome for BCH and crypto, at least the rising hash war and contention from opposing camps will start the beginning of an end. Whether it ends as disastrously as the Brexit deal or not remains to be seen, but it’s unlikely that the two will live in harmony.
Featured image from Shutterstock.
