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Bitcoin Crashes Again—Is Brexit to Blame?

A Bitcoin sign is seen in a window in TorontoA Bitcoin sign is seen in a window in Toronto
A Bitcoin sign is seen in a window in Toronto.Photograph by Mark Blinch — Reuters

What can you say? Bitcoin’s going to be bitcoin. The world’s best known crypto-currency has on been an incredible tear for months, reaching a two-year high of $774 per unit on June 18.

But then the bottom fell out (again), and the price plummeted to a low of $551 at one point on Wednesday. That’s a drop of nearly 30% in less than a week, representing yet another example of the boom-and-crash patterns that have been part of bitcoin since the beginning.

While there’s been a modest bounce-back (the price was around $580 early Thursday), it’s worth asking what caused bitcoin to collapse this time around.

According to CoinDesk sources, the price crater on Wednesday came in response to signs the U.K. is not likely to leave the European Union. In other words, some may have been treating bitcoin like gold—a value haven in times of volatility—and bet that Brexit would increase its value.

I can’t verify if this true, but color me skeptical. In the event of turmoil in global markets, bitcoin is one of the last places I would put my money. I bet many bitcoin owners feel the same way, and would flee to, you know, U.S. Treasuries or blue chip bonds.

For more on the Brexit, watch:

My own hunch is the price collapse may have something to do with ethereum, the newer and more versatile crypto-currency that some believe will sideline bitcoin. In case you missed it, ethereum is currently caught in an existential cycle of robbery and infighting that its backers can’t stop.

Yes, this implosion of ethereum should, in theory, be good for the price of bitcoin. And some say price movements of the currencies are unrelated or inversely correlated.

Still, it’s hard not to imagine a lot of amateur investors who treat crypto-currency as an asset class—and view ethereum going down the toilet as new evidence that none of this stuff is ready for prime time, and they better ditch their bitcoin too.

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Other reasons for the price swoon may be the same one that drove it up in the first place—a flurry of Chinese investment, and uncertainty over a new protocol that makes bitcoin slower to mine.

Finally, note how last week brought new shenanigans involving Craig Wright, who has claimed to be Satoshi Nakamoto, the founder of bitcoin. Specifically, Wright was the subject of a tome-length profile by a bewildered Guardian journalist, and is announcing plans to build an empire of bitcoin patents.

Many people think Wright is a fraud and a huckster, but he is tied to the small community of coders who truly understand bitcoin, so it’s possible he and other insiders had some role in swaying the currency of late.

For now, the only thing to say for certain is that this not going to be the last time bitcoin goes on a roller-coaster ride. Meanwhile, bitcoin boosters can still take comfort that the currency is still way up from a low of $226 a year ago.