Financial analysts remain optimistic about the outlook for digital asset markets amid Brexit. A new report by Cindicator, a blockchain market intelligence startup, finds that 63% of analysts believe the UK’s withdrawal from the European Union will have a positive effect on cryptocurrency prices. Furthermore, 74% say they are considering holding cryptocurrency in their portfolios alongside other assets such as commodities, stocks, and cash.
Compiled by Cindicator Analytics—a team of professional financial analysts—and Cindicator’s analytical platform, the report summarizes key findings from a study designed to measure the community’s sentiment on Brexit.
The research indicates that analysts expect a hard Brexit would push investors toward crypto as an alternative to the pound, prompting diversification into other currencies and value-preserving commodities. They anticipate that businesses would face higher costs for cross-border trade, which could weigh on financial markets and prompt investors to choose low-yield but reliable instruments such as bonds, or to seek opportunities in markets with stronger growth potential.
By contrast, 18.5% of forecasters believe Brexit will have a somewhat negative impact on the crypto market, at least in the short term. They say a disorderly exit would be particularly damaging to the UK economy and financial markets and could trigger a stock market sell-off. A similar short-term reaction could occur in cryptocurrency markets under that scenario.
The study also examines analysts’ views on how Brexit could reshape the regulatory environment for cryptocurrencies. Nearly half (47%) are optimistic that post-Brexit Britain might adopt a progressive regulatory stance that encourages blockchain innovation and increases technology adoption.
Analysts suggest that, freed from the EU regulatory framework, the UK could independently set the direction of its rules to build a more autonomous financial sector. With the risk of job losses tied to Brexit, the government may also explore new avenues to stimulate economic growth and support the development of emerging technologies.
Only a small minority of forecasters (9%) expect the UK to take an unfavorable approach to cryptocurrency regulation.
Some analysts warn of “a massive capital exodus,” with businesses relocating away from the UK. An illustrative example is the US crypto exchange Coinbase, which opened a new office in Ireland in October 2018 as part of its Brexit contingency planning.