Can You Buy Bitcoin To Survive The Brexit Market Volatility

Markets are at their highest level of volatility after a surprise result from the UK referendum showed that Britain’s favored leaving the Eurozone.  The vote sparked a roller-coaster ride for most global assets with the pound falling to the lowest level in 45 years. Gold at one point had soared over $100.00.

Bitcoin soared this morning to trade above $675 an ounce after just falling to its lowest level in months as polls just days ago indicated that the UK would vote to remain. The surprise vote as saw Prime Minister David Cameron resign.

Bitcoin price has experienced volatility lately with observers pointing to a multitude of factors including increased buying interest from China supporting the price swell and the temporary outages suffered by digital currency exchange BitFinex seemingly contributing to the recent plunge.

The latest bitcoin rally began at 16:00 on Thursday in the hours leading up to the voting deadline. At the time, bitcoin price traded at $564.23. Nearly three hours later 18:40, bitcoin was trading to the USD on the Bitstamp Price Index (BPI) at $628.91. Price plateaued as polls closed at 22:00. The rally resumed as Friday began with the BPI marking $623.03

Indeed, the final count at the time of publishing shows a majority 51.9% vote for the ‘Leave campaign’, garnering over 17.4 million votes.

The fallout has proven to be significant for markets and currencies globally. The pound dramatically plunged to a 30-year low, falling over 10% to $1.33 to the dollar. Against the euro, the pound dropped 7%, to €1.2085 per pound.

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.

The link between bitcoin and gold makes sense. When the market flies from bitcoin, it has to go somewhere, and the argument goes that gold gets some of that action but not during risk off runs as traders move to bitcoin and gold as safe havens.

Greed isn’t the only factor driving financial markets: the other is fear. ItBit’s Lewis calls gold a ‘fear asset’, and said that in time, it will make sense to compare bitcoin against the VIX.

Also known as the ‘fear index’, the VIX is the colloquial name for the Chicago Board Options Exchange Market Volatility Index. It is a weighted blend of 30-day options across the S&P 500 index, enabling people to use it as a broad measure of volatility over the coming month. In short, when markets get wild, the VIX goes up.

Bitcoin, in its present form, has a stark resemblance to gold. Both are backed by no one. Both are, relative to fiat currency, inconvenient for day to day use. Your gold coins or bitcoins won’t do much good at the grocery store. Both lack intrinsic value. If the apocalypse arrived tomorrow, your gold and BTC won’t help you survive against the zombies. Both have value only because society has confidence that they will maintain said value over time.