Instability of the euro could start to impact Bitcoin
Crypto enthusiasts believe that the potential fall of the European Union could have a major effect on Bitcoin
The pandemic has dealt a heavy blow to many institutions around the world. One such entity that is currently under threat is the European Union (EU)— and the euro.
Many financial analysts took to Twitter to express their opinions. One hot topic is the impact of the euro’s dissolution to Bitcoin.
Remi Tetot, the co-founder of macroeconomic research firm Global Macro Investor, believes that there is a chance that the “Euro will go bust,” sometime soon.
He laid out his analysis for the case in a series of tweets. His explanation centres around the EU’s proposal to save the economy from the coronavirus with a massive stimulus package. This would entail printing billions through the European Central Bank, which would lead to excess liquidity and a break on its all-time support.
1/ The ECB is going to have to print its way out of covid-19 but also to stimulate the recovery…balance sheet is going to explode to nearly €8 trillion…Inc. €1.8 Trillion current package talks. pic.twitter.com/9oc6frWk5z
— Remi Tetot (@TetotRemi) May 30, 2020
In the past, other Eurozone countries have stepped in to help during times of crisis, such as when Germany backed Greece over its debt crisis. However, there have been increasing tensions between member nations; with the ongoing Brexit saga a prominent example.
A recent ruling from Germany’s Constitutional Court regarding the European Central Bank’s mass-buying to stabilise the eurozone is partly in violation of the German constitution. Tuomas Malinen, the Chief Executive of GnS Economics and a professor in Helsinki, believes this is a signal that the country may need to start withdrawing from the Eurozone.
His extensive 20-part Twitter thread also predicted that the current bailouts being considered for the coronavirus outbreak are set to “impoverish” the entire Eurozone, which, he claims, will force more “well-off” nations to introduce increasingly nationalistic economic and social policies. This, in turn, would erode the efficacy of the EU.
A thread, why the breakup of the #Eurozone is a near certainty.
The unfortunate fact is that the EZ has been an ill-conceived political project from the beginning.
— Tuomas Malinen (@mtmalinen) May 12, 2020
Travis Kling, the CIO of Ikigai Asset Management and a former Point72 portfolio manager, believes that the dissolution of the EU would have an immediate and disastrous effect on Bitcoin.
“If the Euro looks like it’s collapsing, that’s prob a BTC crash (global massive risk-off) followed by orange coin number go bigly up (rush to hard money).” his tweet read.
The collapse of the EU would leave many nations struggling under the weight of heavy debts and the dissolution of the Euro would dramatically overthrow global finance as the world waits for new commercial and social systems to come into effect.
However, investors flocking to safe-haven assets in the midst of a monetary meltdown may help Bitcoin in the long run.
Kling clarified in a follow-up tweet that he felt a collapse of the euro would be the likeliest and quickest path to “hyper-Bitcoinization.”