The digital currency/technology surged 20% in value from June 8 through the July Fourth weekend. NYSE-backed bitcoin broker Coinbase reported a 300% increase in European activity outside of Greece in less than 48 hours during the last days of June, and recorded almost 120,000 transactions in a single day in the last 30.
In fact, the hybrid status of bitcoins - the IRS defines them as "property" rather than "currency" -- may be part of their appeal right now. But to whom?
"Bitcoin provides a way of storing assets outside of the banking system while still having a means to transact online. It is a hedge against political risk," said Adam Wyatt, chief analyst and editor of BullBear Analytics. "While it might comfort some bitcoin faithful to think that Greeks are buying bitcoins, that is unlikely in our opinion. The Chinese are always buying bitcoin."
"The situation in Greece showcases how the traditional banking infrastructure can become influenced negatively by governments and provides an example of how [investors have] the ability to safeguard the value of one's money in such situations," said Peter Rizzo, U.S. editor of Coindesk.com, a speciality blog covering the bitcoin industry as a technology rather than currency. "Political crises of this nature have become a rallying point for those who are attracted to bitcoin because of certain political ideologies and this situation provided a good vehicle for those people to espouse why they believe the technology to be useful as an investment."
Rizzo believes that the jump in activity in bitcoin is actually coming from a very few investors who are taking the opportunity right now to make a vocal statement where it counts -- the market. "Bitcoin is a relatively shallow market, where purchases of large quantities of bitcoins, even by a very small number of buyers, can cause notable price increases," he said. "So while the price may have risen, that doesn't necessarily correlate into wider adoption."
Wyatt concurs. "Our guess is that the recent rise has been caused by Western speculators that fear a Grexit would spark an eventual dissolution of the E.U., creating a bank run on major European banks," he said. "This would lead to widespread capital controls, which, again, bitcoin is good for getting around."