It has been months since the Greek government and its creditors have tried to hammer out a plan to avoid default and a potential exit from the euro zone. Over the weekend, talks between the negotiation teams broke down once more, putting Greece closer to leaving the shared euro currency and possibly reverting to the drachma.
Capital controls have already been imposed in Greece in order to prevent a bank run, and these include having withdrawal limits on ATMs. The Greeks are starting to fear that their own currency might not be worth anything, leading several to move their money to bitcoin instead.
Bitcoin and Greek Buyers
Financially-savvy Greeks who know all too well that the reintroduction of the drachma might leave them with a worthless currency have started investing in bitcoin, as this cryptocurrency could prove to be a better store of value. After the weekend, the price of bitcoin opened significantly higher, as the rally was buoyed by Greek buyers.
According to Joshua Scigala, co-founder of Vaultoro.com, the company has seen a 12% increase in bitcoin buying originating from IP addresses in Greece. This phenomenon was also seen during the crisis in Cyprus a few years back, which boosted bitcoin prices by over 700% during the months that the ECB imposed capital controls on its banks.
Greece is facing a 1.6 billion EUR debt payment deadline to the IMF tomorrow and if they are unable to meet this obligation, bitcoin could draw more supported from frustrated citizens hoping to hold on to their purchasing power. The ECB has declined to expand its emergency assistance fund to the nation, which will be having a bailout referendum next weekend.
The lack of any solution to the crisis could prompt more capital flight, even from other members of the euro zone as the existence of the euro could soon be questioned.
