UPDATE 13TH JULY: A Greek exit of the Eurozone appears to have been avoided, for now. Global financial markets are calming, and Bitcoin prices are cooling (as of 5AM, Monday EST, Bitcoins are selling for about $290).
If you’re looking to pick up some more Bitcoins, you”d better be willing to shell out some serious cash. Bitcoins are now selling for more than $300 dollars a piece, having surged over the weekend. The recent price spike is most likely due to the ongoing financial crisis in Greece. Developments over the weekend have now set the stage for a possible Greek exit of the eurozone, which could destabilize the European Union and potentially the euro itself.
Germany has drawn a line in the sand, essentially telling Greece that it must make one of two choices. First, they can accept all the austerity and reform stipulations laid forth by Germany and other EU authorities. If they do so, discussions regarding another bailout can begin. Second, they choose to reject any of the austerity measures and no discussion can commence, which would essentially mean that Greece will fall into default and likely be forced out from the Eurozone.
The likelihood of a so-called Grexit has never been so high. Given how tense conditions have been and how likely a Greek default has appeared in the past, that’s really saying something. The current ruling party in Greece, the leftest Syriza party, swept into power specifically on a platform of resisting EU austerity measures and central authority. Further, the Greek people themselves soundly rejected the austerity measures just over a week ago in a nation wide referendum. This is going to make it difficult, if not impossible, for the Greek government to back down.
If the Greek government does accept the austerity measures, the ruling party could face a huge backlash. The possibility of Greek society collapsing cannot be ignored either as past austerity measures have resulted in massive protests. The most recent round of austerity measures would be among the toughest and most substantial yet, while at the same time past rounds of measures have already weakened Greek society and social safety nets.
From their first days in office, most leading members of the ruling party, including Prime Minister Alexis Tsipras, have been adamant that they would stand up to austerity measures. Now, with Germany unwilling to compromise, Greek authorities may have no other choice but to reject austerity and let the cards fall where they will.
Meanwhile, no one is sure what a Grexit will do for the euro and the European Union. Policy makers will be entering uncharted territory, and while much of the current focus is on Greece, other countries such as Italy, Portugal, and Spain – and even the European Union as a whole – have struggled with slow growth over the past few years. The turbulence created by a Grexit could destabilize the European Union, though EU leaders are confident they can weather the storm.
All the turbulence in the European Union appears to be bolstering Bitcoin’s price. One month ago, on June 13th, Bitcoins were selling for only about $230 a piece. As tensions increased, the cryptocurrency price began to climb, and by the time July 1st rolled around, Bitcoin had reached nearly $260. Meanwhile, conditions between the EU and Greece only worsened and over the weekend Bitcoin has surged from less than $270 on Friday to over $300 dollars a piece.
If conditions continue to worsen, and right now it’s hard to imagine otherwise, Bitcoin’s price will probably continue to climb. The gulf between Greece and the EU may simply be too far and too wide, and it may be too late to resolve the issue through negotiations. With Germany refusing to budge, and the Greek having possibly painted itself into a corner, the possibility of a resolution has never appeared more bleak.