With the Brexit being the worst one-day global financial crash since the Lehman Brothers bankruptcy in 2008, Bitcoin gained a tremendous amount of credibility as a safe haven asset that is “good as gold.”
Supporters have claimed that Bitcoin and other cryptocurrencies are the ideal protection from the destructive policies of central banks and their “fiat” currencies. They highlight that when the US Federal Reserve was founded by an Act of Congress in 1913, the official price of an ounce of gold was $20.64.
An ounce of gold today sells for $1,333.50. That 6,470 percent increase in the price of gold means that the value of the U.S. dollar versus gold has fallen by about 97 percent in the last 103 years.
According to Ned Scott, CEO of Steemit, a social media platform for the Steem cryptocurrency: “Centralized, debt-based economies and their currencies come with risks, such as bail-ins and bail-outs that digital currencies protect consumers from.”
In the hugely well-funded campaign by the UK government, both major political party leaderships, and groups such as George Soros’ Open Society Institute, UK voters were told they would be stupid rubes to give up $82 billion of intangible “lifestyle” EU benefits for the $46.6 billion in hard costs and 40,000 stifling EU regulations.
With victory for “remain” seemingly assured, London bookies offered 13 to 1 odds that Britain would vote to stay in the EU after a quarter century of deepening integration.
That explains why the shock and awe of the June 23 victory for Brexit caused a “black swan event” that roiled financial markets. The British pound nose-dived by 11 percent and UK stocks plummeted 8 percent. A worldwide financial terror caused European stocks to tank by 6 to 8 percent, Asian stocks to tumble by 5 to 10 percent, and U.S. stocks to take a 5 percent hit.
But according to Lee Adler of the Wall Street Examiner, “In the six hours or so from when the [Brexit] results started to trickle in (about 7 p.m. EDT) until it was obvious that the Brexit had become a reality, the Bitcoin price spiked up by about 8.8 percent…”. The move up essentially “mirrored” the 8 percent jump in the price of gold.
Barry Silbert, founder and CEO of the Digital Currency Group and the creator of the Bitcoin Investment Trust, tweeted just moments after the vote: “This is Bitcoin’s coming out party as a global safe-haven investment. Amazing.”
This is bitcoin’s coming out party as a global safe haven investment. Amazing
— Barry Silbert (@barrysilbert) June 24, 2016
He added, “This idea isn’t new to the Bitcoin community, but until now we haven’t really seen it manifest in the Bitcoin price.” Over time, perception becomes reality.”
Lee Adler is best known for anticipating and taking advantage of where big investors are beginning to move capital. He now believes that Bitcoin’s performance in the Brexit panic means cryptocurrencies have finally become a true alternative to the traditional “safe-haven assets” such as gold, silver, and U.S. Treasuries.