It has been months since the Greek government and its creditors tried to work out a plan to avoid a default and possible exit from the euro zone. At the weekend, the talks between the negotiating teams broke off again, which brought Greece closer to an exit from the common euro currency and a possible return to the drachma.
In Greece, capital controls have already been put in place to prevent bank runs, including withdrawal limits at ATMs. The Greeks are beginning to fear that their own currency might be worthless, leading several people to switch their money to Bitcoin instead.
Bitcoin and Greek buyers
Finance savvy Greeks, who know all too well that the reintroduction of the drachma could leave them with a worthless currency, have begun investing in Bitcoin as this cryptocurrency could prove to be a better store of value. Bitcoin price opened significantly higher after the weekend as the rally was driven by Greek buyers.
According to Joshua Scigala, co-founder of Vaultoro.com, the company is seeing a 12% increase in Bitcoin purchases coming from IP addresses in Greece. This phenomenon was also seen during the Cyprus crisis a few years ago, which drove Bitcoin prices up over 700% in the months the ECB imposed capital controls on its banks.
Greece faces a € 1.6 billion payment deadline tomorrow to the IMF, and if it fails to meet that commitment, Bitcoin could get more support from frustrated citizens hoping to keep their purchasing power. The ECB has refused to expand its emergency fund to the country, which will hold a rescue referendum next weekend.
The lack of a solution to the crisis could lead to further capital flight, including from other members of the euro area, as the existence of the euro could soon be called into question.