The price of bitcoin fell $100 during a five-hour span today, dropping 15% to reach a low of $551 on the CoinDesk Bitcoin Price Index (BPI).
The move represents a continuation of the recent price correction that began when bitcoin hit a high of $774 on 18th June, a move market observers suggested indicated the digital currency was “overbought” after reaching two-year highs.
Such a sentiment continued to be voiced by market observers today following the day’s sharp price drop, with blockchain advisor and consultant George Samman indicating the currency’s value increased “too fast” this month, and that as a result, price support is now weakening.
Still, sources suggested that the decline is a response to the increasing likelihood that the UK will likely vote to stay in the European Union (‘Bremain’), an outcome that could be made official as soon as late Thursday night in US, Friday morning UK time, reports suggest.
The comments echo the widely held belief that bitcoin is a “safe haven” asset that benefits from times of macroeconomic uncertainty in which its strengths as an investment vehicle whose value is derived solely from a global market are best on display.
For example, traders have cited the ‘Brexit’ vote, as well as economic uncertainty in China as factors that propelled the price to its highest level in 28 months this June.
In statements, Tim Enneking, chairman of Crypto Currency Fund; investor and entrepreneur Vinny Lingham; and Arthur Hayes, co-founder and CEO of bitcoin leverage trading platform BitMEX, all cited the coming ‘Brexit’ vote as the defining influence on the decline.
Hayes told CoinDesk:
“The drop below $600 indicates that many traders believe that ‘Bremain’ will prevail. The vote is still too close to call with various polls indicating ‘Brexit’ and ‘Bremain’ in a dead heat.”
Hayes predicted the digital currency could rise to $700 should Britain vote to exit the EU, but linger at $550 if the country decides to remain in the economic union.
In turn, Samman voiced his belief that the $560 price level would be one to watch going forward, naming it a key indicator of confidence that could determine future price movements.
Still, Lingham took a more positive stance, asserting optimism will prevail following the ‘Brexit’ vote, and that the price will soon return to the $600 to $700 range.
Charles Bovaird contributed reporting.
‘Brexit’ image via Shutterstock