Uncertainty Around The World Could Cause Crypto Prices to Surge Over the Next 12 Months: What To Look For
A new report suggests investors could turn to cryptocurrencies for refuge in an uncertain world of trade wars and political turmoil. If the report is to be believed, this global instability will lead to an unprecedented cryptocurrency boom in the next 12 to 18 months.
In times of trouble, investors look for a safe refuge for their assets. Today’s economy is being rattled with trade wars, political turmoil, and falling national currencies. Cryptocurrencies could be the safe haven investors desperately need.
We don’t have to look far to find an example of instability leading to a surge in cryptocurrency prices. Venezuela has been in a disastrous economic situation for the last few years. As Venezuela’s national currency plummets in value due to inflation, Venezuelans have increasingly turned towards bitcoin and other cryptocurrencies. Venezuela has also been impacted by sanctions and political turmoil.
Could we see a similar effect in other parts of the world? That’s the claim made by Andrej Kovacevic over on Born2Invest.com. Kovacevic writes that “global instability may ignite the next crypto boom” as “investors are starting to turn to cryptocurrencies for refuge in an uncertain world of trade wars, political turmoil and falling currency prices.”
Kovacevic argues that cryptocurrencies are emerging from their growing pains. 2017 was the year everybody heard about cryptocurrencies. Prices were volatile, to say the least. In 2018, things have calmed down. The bubble has deflated. The timing could be perfect:
“As it turns out, cryptocurrencies may have started to shake off their reputation for upheaval just in time to take advantage of a global financial market that’s looking for safer bets.”
Kovacevic cites a number of different factors that could lead to a cryptocurrency boom, including Brexit, trade wars between the United States and China, increased numbers of institutional investors, and fluctuating national currencies worldwide.
Why Cryptocurrency Prices Could Surge
In times of instability, investors turn to safe havens to store their value. Gold has traditionally been a popular safe haven. Cryptocurrencies, however, could replace gold as a safe haven – or, at the very least, provide an alternative option for investors looking to hedge their bets.
What kind of global instability could cause crypto prices to rise? Kovacevic cites all of the following factors:
The United Kingdom voted to leave the European Union in 2016. The official dissolution – the final date on which Britain will officially exit the EU – isn’t until March 2019. Markets are already bracing for the impact of Brexit. The UK is the second largest economy within the EU, and the move will impact markets worldwide. Early analysis suggests that Brexit’s impact on economic and political turmoil will be severe. The Guardian recently wrote about the need for the country to prepare for “drastic consequences” as a result of Brexit, for example.
Italy is Facing Political Turmoil
The UK isn’t the only nation causing instability in Europe. Italy, Kovacevic writes, is “in chaos”. The EU’s fourth largest economy recently voted in a leadership coalition that is decidedly anti-EU. There are fears that Italy could default on its debt service agreements, leading to a crisis similar to the one that gripped Greece a few years ago. Italy’s economy, however, is significantly larger than Greece, and the economic impacts of such a collapse would be much larger.
The Falling Euro
All of this turmoil in Europe is causing investors to flee the region. The value of the Euro has been driven downwards in recent months. If Italy and the UK both flee the EU in rapid succession, then the value of the Euro could drop even further.
The US Dollar and Other Currencies Are Also Expected to Fall
Typically, a drop in the value of the Euro leads to a rise in the value of another major world currency – like the US Dollar. However, experts expect that the USD and other national currencies will also fall in value. Here’s how Kovacevic explains it:
“Investment advisors expect weakness in the U.S. dollar going forward, and there are few other opportunities for gains among the other major global currencies. The declining fortunes in currency markets point to an overall downturn for the economies they represent—all of which is good news for cryptocurrencies.
As the only types of currency not bound to any particular nation, but rather upon a fundamental and trustless technology, cryptocurrencies are starting to look like much safer bets for investors than ever before.”
Institutional Investors Are Increasingly Getting Involved with Crypto
Institutional investors are getting increasingly involved with cryptocurrencies. The space is rapidly evolving into its own legitimate global asset class. In the United States, major Wall Street players are anticipating the launch of regulated crypto custody services – something that would make it significantly easier and safer for institutional investors to get involved with crypto.
Typically, in times of global instability, investors would flee from volatile, unstable, unregulated assets. Cryptocurrencies may become sufficiently regulated just in time for a major price surge.
All of This Instability Could Lead to a “Cinderella Market”
Kovacevic believes we’re heading towards a “Cinderella market” in the crypto industry. Global instability is rearing its head just as cryptocurrencies start to become more regulated and controlled. Institutional investors are pouring into the space, and that means greater stability in the industry:
“Unlike small investors, large institutions buy-in for the long term, and the billions that they entrust to the cryptocurrency markets will form an anchor that will lend stability and a new, solid foundation to the market as a whole. For investors that missed the first cryptocurrency boom, we may be about to see a rare repeat—but with even better results.”
All of these factors could converge to create a cryptocurrency boom like we’ve never seen before.