In the course of the massive losses posted last year, general interest in cryptocurrencies has waned noticeably. Neither this nor the sideways trend observed in recent months can alter the fact that the ardent supporters not only view Bitcoin & Co. as the future of money but also as a safe haven in uncertain times on the “traditional” financial markets.
Economic and political factors can be seen as triggers for periods of significantly heightened uncertainty for financial market players in recent years. Concerns about a hard landing of China’s economy (mid-2015 and early 2016) and the US economy (early and end of 2018), and the unpegging of the EUR-CHF exchange rate in January 2015 can be grouped under the first-mentioned factor. The second factor includes the EU referendum in the UK (June 2016) and the presidential elections in the US (November 2016) and France (spring 2017).
While there is no evidence of a clear thrust of the Bitcoin price arising from the economically driven turbulence, major political events were accompanied at times by a noticeable appreciation of the cryptocurrency. Two months after all three cases in question, the Bitcoin price was at least 30% above the level observed one month before the vote. Bitcoin & Co. are likely to see this as confirmation of their opinion that the (political) uncertainty induced by the state institutions – regardless of whether governments or central banks – paves the way for a general acceptance of cryptocurrencies. Given the weaknesses and shortcomings that continue to encumber cryptocurrencies, however, it is doubtful this acceptance will translate into reality in the near future.
Nonetheless, there is one glimmer of hope at present for the cryptocurrency scene. A major political event on the agenda in the coming weeks or months will be the UK’s exit from the European Union. From the experience of recent years, we will no doubt see Bitcoin gains going hand-in-hand with this event.