With COVID-19 at its peak, the UK’s economy has taken a hit (like most countries in the world). This has caused investors to shift their focus toward alternative investments such as cryptocurrency.
As such, the Bitcoin price has reached an all-time high towards the end of 2020. Still, people are unsure of how this currency will perform in 2021, especially if the economy normalizes.
Here, we will look at major factors influencing the price of cryptocurrency in 2020-21. We will see what those factors are, and how the price charts will react to them.
Main Cryptocurrency Price Drivers in the UK in 2020-21
The FCA Ban Decision
What Effect Will the Ban Have?
Other Important Factors Affecting Cryptocurrency Prices
Coronavirus Crisis
The Brexit Event
How These Factors Will Affect Cryptocurrency Price Charts
Cryptocurrency Still Has Upside Potential in the UK in 2020-21
Main Cryptocurrency Price Drivers in the UK in 2020-21
The FCA Ban Decision
During the latter half of 2020, the Financial Conduct Authority (FCA) decided to ban cryptocurrency derivatives trading for amateur investors.
Derivatives are assets whose value is ‘derived’ from another asset. For example, an option to buy cryptocurrency at a later date is a derivative asset.
Cryptocurrency is a highly volatile market, and new players often don’t understand its intricacies. The main reason for introducing this ban was to prevent new investors from losses.
What Effect Will the Ban Have?
While the effects of this ban will be felt in the UK, the effects themselves are minimal. This is because only the UK’s exchanges will be unable to provide cryptocurrency derivatives to amateur investors.
You can use an exchange based in another country or a decentralized exchange to access derivatives instead. Decentralized exchanges utilize peer-to-peer transactions and are not affected by any regulatory actions.
Other Important Factors Affecting Cryptocurrency Prices
So far, we know that the effect of the FCA ban decision is minuscule. Let’s look at two other important cryptocurrency price drivers:
The Coronavirus Crisis
While vaccines have started to appear in late 2020, the vast majority of the world will not have access to them. It seems likely that COVID-19 will still have a huge effect on the economy in 2021.
This will probably cause investors to pursue stable and safer assets. While cryptocurrency isn’t stable, it has performed very well during periods of crisis in the past. This will cause cryptocurrency to further rise in price.
The Brexit Event
Brexit has thrown the UK’s economy, already hampered by COVID-19, into further turmoil. An agreeable solution seems unlikely, and it is possible that the UK will leave the EU without a trade deal.
It makes investors prefer safe-haven assets and currencies, with Bitcoin being one of the most popular ones.
How These Factors Will Affect Cryptocurrency Price Charts
Regardless of the UK’s regulation, cryptocurrency is a universal asset. As such, it seems likely that the price of Bitcoin and other cryptocurrencies will continue to rise in 2021.
However, it is important to note that the government may try to restrict and monitor certain operations. Because of this, it might be preferable to diversify into a private coin like Monero through a BTC to XMR chart.
Cryptocurrency Still Has Upside Potential in the UK in 2020-21
All of the aforementioned factors point to an increase in cryptocurrency prices in 2021. Despite the best efforts of the regulators, people in the UK can easily access crypto signals and crypto derivatives markets through foreign crypto exchanges.
Now is still a great time to take advantage of this future upswing. Make sure to use a safe and anonymous exchange like Godex.io and ride the crypto hype-train.
