Bitcoin Price Report for June 22, 2016

No doubt that the topic du jour for financial market participants is the successful Brexit vote and what the potential implications are for all assets, including bitcoin. While this could have had a small near term effect on price, we think it is a stretch to proclaim causation.

The Brexit vote and subsequent price action in the bitcoin markets is exemplary of what is becoming a common misperception on the part of bitcoin traders and investors. Fundamental global macro events might indeed cause very short term perturbations in the markets, however we think it is spurious to say that these events are directly influencing supply and demand in the nascent cryptocurrency. 
We think that what appear to be catalyzed moves in bitcoin are more likely indirect influences exerted by shifts in perception regarding legacy currencies and commodities. We also think that a contributing factor to the apparently correlated moves is speculators attempting to anticipate the market’s reaction to these events, which in turn makes the price action somewhat of a self-fulfilling prophecy. 

We think this is not only the case with regard to Brexit, but also as far as moves relating to China, the FED, stock markets, and precious metals. This postulation is supported by statistical evidence that bitcoin remains highly uncorrelated to all other traditional asset classes over time, something that should come as no surprise seeing as though this is still a highly misunderstood financial instrument. Having said that, the misunderstanding also creates opportunity for those of us that do “get it”, which is another reason we want to remain in BTFD mode...

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