So, the Greeks have comprehensively rejected the imposition of austerity measures proposed by the troika of its creditors in lieu of the bailout funds. The outcome of the referendum held yesterday has also heightened the probability of a Grexit.
Ever since it became clear in early May that the Greek government and the troika of European Central Bank, IMF, and the European Union will be at loggerheads over the terms and conditions of the future bailout packages, the cryptocurrencies including Bitcoin, Litecoin and Dogecoin have performed stupendously well, with returns varying from 20% to roughly 250% till date.
Take a look at the daily price charts of Bitcoin, Litecoin and Dogecoin below:
It’s the Speculation, Stupid!
Hundreds of articles are online now linking the Greece crisis to the price jump in cryptocurrencies. But, investors must realize that Greece exiting the Eurozone (if it happens) and creating its own currency is not the same as hoarding Bitcoin or any other cryptocurrency for that matter.
It can be understood that Greeks are converting whatever Euros they have left into Bitcoin for preservation purposes, but this is a one-off move. Greece may return to a “new drachma” which may not be Bitcoin, Litecoin or Dogecoin, and then what, this maddening speculation will end abruptly resulting in a biblical crash in their prices.
Cryptocurrencies are behaving like third-grade stocks
The bullish frenzy in the cryptocurrency markets has also exposed a major flaw: they can be easily manipulated by those having deep pockets. If this continues, the cryptocurrencies will never become money and will be left as a speculative tool at best! Just like the third-grade stocks which have no fundamental backing to support their sky-high valuations in bull markets and crash devastatingly in times of stress.
A similar yet insightful opinion regarding the same has been presented before as well.
This herd mentality will bring tears to the investors!
Understanding that there is no meaningful positive development which underlines buying the cryptocurrencies, investors can avoid huge losses. But, following the herd mentality that Greece giving up on capital controls translates into big gains for Bitcoin or another cryptocurrency is just self-fulfilling prophecy.
In plainspeak, there is a higher chance of investors losing this gamble than winning it!
Nikhil Gupta is a Bitcoin writer/analyst at NewsBTC.com. He provides opinionated and informative articles, price analysis, and covers news stories related to the cryptocurrency. He is an avid Bitcoin follower and has been tracking the currency since late 2013. View all posts by Nikhil Gupta
Ever since it became clear in early May that the Greek government and the troika of European Central Bank, IMF, and the European Union will be at loggerheads over […]