Bitcoin values could reach record highs if Britain leaves the European Union without a deal, according to analysts.
The cryptocurrency has made solid gains over the past week, rising from its August low of $9,930 (£8,200) to a high of $12,670 (£10,460), according to ranking site CoinMarketCap.
Its gains still put the virtual currency some way off its all-time high of $20,000 (£16,510), recorded in December 2017, but bitcoin’s value has risen throughout the year and values look set to climb further in August.
That’s in spite of Boris Johnson pledging to leave the EU with or without a deal on 31 October, which appears to have been a factor in the pound plummeting to its lowest point against the dollar since January 2017, The Guardian reports.
Speaking to The Independent, Nicholas Gregory, head of blockchain tech firm CommerceBlock, said that bitcoin has “rediscovered its mojo” this year and the prospect of a no-deal Brexit “could see a massive and unprecedented breakout.
“Not only will a no-deal departure from the EU create turmoil and volatility across two major fiat currencies, it will also trigger an identity crisis for the global system as the contingency and vulnerability of major global fiat currencies is laid bare,” he said.
Is bitcoin now a back-up plan for currency investors?
Despite its volatility, which can see values fluctuate wildly on an hourly basis, investors appear to be turning to bitcoin as a means to offset uncertainty in traditional fiat currencies.
Simon Peters, an analyst at eToro, told the Daily Express that bitcoin’s recent gains are partly the result of Chinese investors turning to the cryptocurrency as a result of yuan values tumbling against the dollar.
“It’s no coincidence bitcoin’s surge over the weekend has coincided with Donald Trump’s announcement of tariffs on $300bn [£247bn] worth of Chinese goods,” he said.
“The yuan has fallen against the dollar to levels not seen since the 2008 financial crisis and Chinese investors are casting around for alternative assets for their wealth… Given that Chinese investors make up a large proportion of crypto investors, there’s a strong possibility some are backing bitcoin’s chances against the yuan,” Peters concluded.
Falling values in the pound may also be enticing investors over to bitcoin. Nigel Green, chief of financial consultancy firm deVere Group, told the Independent that bitcoin serves as a “flight-to-safety asset during times of market uncertainty”.
Where is bitcoin trading today?
Bitcoin was trading at $11,840 (£9,760) as of 10am UK time today, according to CoinMarketCap.
Ethereum, which sits in second place in the cryptocurrency rankings, is having a rockier month than its rival. The ranking site says the digital coin is currently trading at around $214 (£176), down from its value of $218 (£180) per coin at the beginning of August.
Behind ethereum sits the banking-focused coin Ripple. Its value has slipped from $0.32 (£0.26), on 1 August, to today’s price of $0.30 (£0.25), CoinMarketCap reports.