In the previous weeks, macroeconomic uncertainty has spurred investment interest in bitcoin, but is this likely to continue?
As we covered last week in our H1 2016’s market analysis, prices have pushed up 50% from 1st January, and two key drivers were, at least according to market observers, uncertainty in China (where the yuan has been devalued ) and Europe (where the UK voted to leave the EU in an event known as the ‘ Brexit ‘).
Looking ahead to the second half of the year, it remains unclear, however, if these events will continue to be factors impacting digital currency price movements.
But, economists are now suggesting that should China’s economy falter in the wake of the ‘Brexit’, heightened risk aversion may cause investors to look again at risk-off assets including bitcoin.
Three economists spoke with CoinDesk about this situation, shedding some light on the complex nature of China’s economy and how the global superpower could be adversely affected by the Brexit. Risk to trade
Since China does substantial business with both the UK and the broader European Union (EU), economic difficulty in either entity could undermine business conditions in China.
Sam Rines, senior economist and portfolio strategist for Avalon Advisors LLC , told CoinDesk that a slowdown in EU demand for Chinese goods would present "a tremendous risk to the Chinese economy".
The "single market for Chinese goods" could also suffer if the Brexit triggers a "domino effect" of other nations leaving the EU, said Usha Haley, professor of international business at West Virginia University.In addition to potentially suffering undermined trade, China’s foreign direct investment could take a hit, Haley, who has researched and advised companies on Chinese investment and trade for more than a decade, told CoinDesk."In broader economic terms, with Brexit, China has lost a strong supporter for its free-market status […]
