Is the Greek crisis raising the value of Bitcoin?

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Greece’s financial system has hit a new low this week, with traditional currency falling by the wayside, but the value in Bitcoin has risen significantly. Are these two events linked?

The crisis surrounding Greece’s financial future and its place within the European Union has heated up in recent days, with Prime Minister Alexis Tsipras closing banks on the 29th June for at least 6 days, along with imposing capital controls. Greek citizens can only withdraw €60 per day via ATM machines, so many will be looking for alternative forms of currency.

This is where bitcoin comes into play.  On the 16th June, the value of the cryptocurrency spiked 7 per cent, with Reuters reporting that the increase was down to Greece’s growing economic crisis. The report even went as far to suggest that bitcoin could be used as a ‘‘parallel currency to the euro in Greece in order to avert an exit from Europe.’’

Currently, one bitcoin is equal to $261, but Tony Gallippi, the co-founder of bitcoin payment processor Bitpay predicted that the price of bitcoin will surge to between $600 if Greece exits the EU.

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Trading experts have also given their opinion on the latest rise, stating that Greece could be behind the currency rise.

‘‘(Bitcoin) had been middling around the $235-245 range for several months, and all of the sudden this crisis escalates and you’ve gotten yourself a nice 10-point pop,” said Brendan O’Connor, CEO of digital currency-specialists Genesis Global Trading.

There are many bitcoin representatives who don’t believe that the Greece crisis is behind the value rise. In an interview with Coindesk, community manager of LocalBitcoins Max Edin played down suggestions that bitcoin was flourishing due to economic problems abroad.

‘‘I can’t see any notable increase in new registered users from Greece apart from normal growth. Overall trade in EUR is up a bit this past week, but still within the regular growth trend we see,’’ explained Edin.

The market value of bitcoin has fluctuated dramatically in recent years as the cryptocurrency aims to become an established form of payment.

In December 2013, Bitcoin’s value was at its highest, costing users $1,147 per coin. In April 2015, the currency decreased nearly 10 times in value, costing an estimated $238.

It is unclear if bitcoin’s rise in value has anything to do with the financial crisis in the Mediterranean, but with the Greek crisis intensifying, there is sure to be a large ripple effect that will disrupt not just bitcoin, but financial institutions the world over.

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