Yesterday, we wrote about how the recent hype about bitcoin rallying “because” of Greece might be overstated and that finding a real “reason” behind a given move is extremely hard if not impossible. As Greece stumbles toward capital controls, bitcoin is once again proving its disruptive power within the global financial system.
Over the past week, both the price and volume of bitcoin has been increasing (it's up 11% so far in June) - this is similar to the activity that occurred when Cyprus introduced capital controls in 2013. During the Cyprus crisis, citizens were not only locked out of their bank accounts but many found that some of their money was confiscated when the banks re-opened. This confiscation went by the "friendly" moniker "bail-in." In the Cyprus bail-in, any deposit above 100,000 euros were converted into Bank of Cyprus shares. Given this precedent, it is no surprise that Greeks are seeking a safe haven for their savings.
Yesterday, we wrote:
We’ve stressed this before, we stress it again: it is never quite certain what the driver is behind a given move in the market. The recent rally might have to do with the Greek crisis, but it might also not have much to do with Greece. The real reason behind the move is that there was increased buying in the market.
We’ve also recently heard news of Greece leaving the Eurozone and leaning toward Bitcoin. We’re extremely skeptical of such statements. Yes, the Greek finance minister has written about the possibility on his blog, but you have to consider two factors.
Firstly, it is not sure whether Greece will actually leave the euro. The current bickering over reforms and debt haircuts might only be a strategy of the both sides to gain as much as they can. It certainly would not surprise us if the deal wasn’t struck before very late in June, perhaps even close to June 30.
Secondly, even if Greece were to leave (which is far from certain), it would likely not adopt Bitcoin. This is simply because the government would most likely want to retain control over the amount of money in the economy. Its inability to do that is one of the reasons it is where it is now. Also, switching back to the drachma would be far easier than to Bitcoin – and any move would have to be relatively quick.
Bitcoin might be becoming a sort of safe haven but we haven’t really seen enough evidence to support that so far. It might be that the move up was driven by uncertainty about Greece but it might also be that the two are unrelated. Please, keep that in mind while reading about Bitcoin becoming the new money of Greece – it is highly unlikely.
For now, let’s focus on the charts.