Bitcoin has surged from just over $240 on Friday to nearly $250 on Sunday evening, marking one of the 72 best performances in recent memory. So what has bitcoin on the rise?
It appears that investors are once again growing nervous because of Greece, due the high likelihood that the country will miss its billion dollar debt payments and could be forced to leave the Eurozone. As a result, fears of a run on Greek banks are becoming very real with long lines and empty ATM machines being reported over the weekend.
Last week, Greek negotiators literally walked out of negotiations with other EU leaders, and negotiations haven’t been fairing much better so far this weekend. European Union officials insist that they are trying to work with Greece to resolve the issue, but Greek leaders claim their European counterparts are being too inflexible.
Greek negotiators flat out rejected the last round of demands, feeling that their country had already given up plenty of concessions. The Greek government has been asking for another round of funding, but European Union officials are demanding increased austerity in exchange for the funding. Having failed to secure a deal through negotiations and refusing to install austerity measures on its own, the Greek parliament has voted to hold a referendum so that the Greek people can decide.
Given the dire state of Greece’s economy, and the souring views of many Greeks, however, the proposed austerity mearues will most likely be defeated. Indeed, when Greek Prime Minister Alexis Tsipras addressed his people, he called the demands “blackmail”, but promised to abide by the will of the Greek people, if they should vote in favor of austerity.
Also, news broke that Greece will keep its banks shuttered at the start of the week, and that the government is installing capital controls to try to stem the flow of money. Massive ques continue to form at ATM machines, and it’s estimated that less than 40 percent of ATMs still have cash in them. The government is now considering limits on how much people will be allowed to withdraw from an ATM in a given day, and that limit could end up being as little as 60 euros.
Unless the Greek people pull a surprise and vote for austerity measures, or another type of agreement is reached, there is a very high risk that Greece will fail to make its debt payments come Tuesday. If so, financial markets will be roiled, and the possibility of a Greek exit from the Eurozone will become very real. This could encourage even more people to seek shelter in bitcoin, potentially driving prices up even further.
For the bitcoin community, the recent price surge is nothing but good news. Not only are bitcoin investors raking in cash, but the simple fact that bitcoin is becoming a currency of choice for people during periods of financial crisis is proof that bitcoin can and will serve its purpose. Remember, bitcoin was created by Satoshi Nakamoto to offer an alternative to national currency, which far too often are subject to the financial mismanagement of politicians and bureaucrats. Bitcoin, being a peer-2-peer currency offers a clear alternative, and right now it must look like a very attractive alternative for many investors, given the recent price bump.
Given the state of the global economy and the fact that many countries, from China to the United States and other countries in Western Europe, are struggling with high debt levels and sluggish grow, financial turmoil could crop up again in the future. As national currencies lose their luster, bitcoin could become one of the biggest winners. The all-digital, P2P currency offers many advantages over national currencies.