The fear of a Brexit has helped drive the price of bitcoin to levels not seen since the beginning of 2014, but now the likelihood of the U.K. voting to remain in the European Union has seen the price of the cryptocurrency plummet by over $100 in the space of just five hours.
The price of bitcoin has always been volatile, but the last month has seen unprecedented swings the value of the world's most-used cryptocurrency. Prices have gone from $450 on May 26 to a two-year high of $775 last Saturday and back down to $550 Thursday.
This has been mirrored by the fluctuating market cap of bitcoin, which has gone from under $7 billion to almost $12 billion and back to just above $9 billion over the same time period.
The price roller coaster can't be pinned to any single factor, but there are a couple of issues that seem to be driving the price higher, and subsequently lower, over the past month, key among them the U.K. referendum on membership of the European Union.
As Britons vote in the referendum Thursday and the outcome of the vote remains tight, it appears financial markets at least have decided that the U.K. will vote to remain in the EU. As this consensus emerged on Wednesday, it seemed to have a direct impact on the bitcoin price.
Over the course of just 24 hours, bitcoin went from over $685 to a low of $551, though it rebounded slightly Thursday morning to $580. Unlike the value of sterling, bitcoin prices tend to soar in periods of macroeconomic uncertainty, and with the U.K. considering a complete break from the EU, bitcoin had been seen as a stronger investment opportunity.
“The drop below $600 indicates that many traders believe that ‘Bremain’ will prevail,” Arthur Hayes, co-founder and CEO of bitcoin leverage trading platform BitMEX told CoinDesk. “The vote is still too close to call, with various polls indicating ‘Brexit’ and ‘Bremain’ in a dead heat.”
A similar trend was observed last month when the Chinese yuan was devalued, a move which saw investors in China increase their stake in bitcoin, a move which initially drove the price of bitcoin above $500 for the first time since September 2014.