Will Prices Of Bitcoin Continue To Feel Influence Of Brexit And China?

Brexit China Bitcoin

Since past few weeks, the macroeconomic uncertainty has caused a spur in the interest in the investment of Bitcoin. The prices have been pushed by 50% from the ones on January 1st. The two key factors responsible are believed to be Brexit (the event where UK voted to leave EU) and the uncertainty in China (where yuan is being devalued).

Going into the second half, it is still unclear whether these events will continue to impact the movement of Bitcoin price of this digital currency.

Risk involved with trading

Since China is involved with lot of business deals with both the UK as well as the broader EU, the economic difficulty in either can cause these deals to falter as they might undermine the business conditions in China.

“In addition of suffering from undermined trade, the foreign direct investment of China could be taking a massive hit. In broader terms, because of Brexit, China has lost one if its stronger supporters for the free-market status within European Union” stated Usha Haley, the professor of International Business at West Virginia University.

Concerns related to debt

The observers of Market have been repeatedly sent out warnings about the growing debt of China. “Eight years of expansionary fiscal policy have left China with a staggering debt-to-GDP ratio of 225%.China has about $2.4tn of corporate debt at risk of default, leading to a very worrisome global financial future” stated Haley.

If Brexit results in the EU economy slowing down, it could cause the EU’s trades will China to slow down and more debt could become unserviceable.

Potential shift

While the efforts which are being made to resolve this situation might cause lot of changes in policy, the Brexit could represent a shift away from globalization which has been dominating the world economy for more than 30 odd years.

Should these changes take place, China, a country that has benefitted massively from globalization and its economy could face a large impact.

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1 Response

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