One Fortnight Away

On June 23rd, Britain holds a Leave or Remain EU referendum. Unfortunately for the establishment, Britain’s continued existence within the EU framework is not assured. Fortunately for Bitcoin, this unwelcome disruption in the global macro-economic framework might take us to back towards $1,000.

What started off as a complete long shot, is now well within reach. Brexit now polls higher than Bremain.

Brexit is contentious because of the message it will send the sick children in Southern Europe. The Greeks were Frau-beaten last summer. If Britain votes to leave the EU and the sun still rises in the east and sets in the west, maybe the Greek people will discover their backbone once again. The Italians and Spanish plebes also might awaken and discover that it ain’t so bad being a sovereign nation once more.

None of this would matter if the European banks didn’t hold a significant percentage of their asset base in Euro-sovereign bonds. If Greek, Italian, and Spanish bonds were marked to market, many of Europe’s largest banks would be insolvent. They would be forced to dilute equity holders massively to plug their balance sheet craters.

Given that all banks are Too Big To Fail, banks would be recapitalised with fresh Euros from Super Mario. While the ECB desires a weak Euro, they don’t want a full blown currency collapse precipitated by a wide-scale banking crisis.

The recent jobs report has thrown cold water on a June or July Fed rate hike. Without the pressure of a rate hike, the PBOC will pause the Yuan devaluation party. Without the Chinese scared of imminent currency devaluation, the Europeans will need to pick up the slack to continue this Bitcoin rally.

In the latest ITV poll, the Brexit votes for the first time polled higher than Bremain. The fear mongering will begin in earnest this week. Only a fortnight remains between the status quo, and change. As poll after poll is released, expect Bitcoin to internalise some of the fear. It could just be what takes us over $600, and into a new phase of FOMO.