Recent developments in both the political and economic world have created an interesting contrast between the perception of currency stability and the reality. The precipitous exit of Britain from the EU promised by the so-called Brexit referendum has sent the value of the pound into a spiral comma dropping its price by more than a third in the short time since the vote. The pound had previously been considered one of the most stable and reliable currencies in the world, and its sudden contraction has removed enormous amounts of value from some of the richest financial portfolios in the world. At the same time, the price for the new commodity Bitcoin has remained nearly steady.
The price of a Bitcoin rose to the 600 to $700 range in the beginning of June, and it has remained at or about that level with surprising determination ever since. This may be the longest period of price stability in Bitcoin’s recent history, and it is certainly the longest since the enormous explosion in value of 2014. A month of momentous events across the world, including multiple terrorist attacks and the aforementioned Brexit-induced crash of the pound, has left the price of Bitcoin substantially untroubled. A brief peak of $800 BTC per USD receded to the apparent new floor of the commodity. Although Bitcoin has enjoyed periods of sustained stability in the past, this is the highest price plateau that it has yet reached.
At one and the same time the pound has undergone the most severe devaluation in its recent history. In fact, this is the most serious drop in its price against the US dollar since 2008. This steep fall can be traced directly to the Brexit referendum of June 23, 2016. Fully ten percent of the value was lost overnight, with the price bottoming out five percent lower than that. This value, where one pound sterling equaled about $1.29, is the lowest the pound has been against the dollar since the Reagan Administration. At the time of this writing there has been a slight recovery, up to about $1.31 per pound, but there has been nothing near what it was before the referendum, and it has certainly not reached anything like the heights that it was at a decade ago. At the moment there is no easily expressible reason why it should return to that price either.
Bitcoin has demonstrated surprising price resilience during one of the greatest modern upheavals of politics and society. Investors looking to expand their portfolios, especially those who have been recently hurt by the deceptively unstable pound sterling, might consider Bitcoin as either a short or long term investment.
Bitcoin acts as a currency, and that is the way that most people interface with it. However it is more accurate to call it a commodity, and it is a commodity that has shown an impressive expansion of value in a short time. This value is based in its real world utility, as it is one of the most impressive systems for transferring money across borders and changing from one currency to another that the world has ever known. It is not surprising that friction between nations translates out to stability in the price of Bitcoin, and investors can expect further expressions of price stability in the future.
