Bitcoin Rollercoaster Rides Brexit As Ether Price Holds Amid DAO Debacle

Bitcoin and ether prices rode a rollercoaster during the week ending 24th June, a period defined by the UK's vote to leave the European Union.

AccessTimeIconJun 24, 2016 at 10:30 p.m. UTC
Updated Sep 14, 2021 at 1:59 p.m. UTC
CoinDesk - Unknown

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Bitcoin and ether prices rode a rollercoaster during the week ending 24th June, plunging lower at some points and pushing higher at others as market participants responded to global economic uncertainty.

The price of bitcoin approached $800, the looming 'Brexit' vote, the latest developments surrounding the collapse of The DAO and a trading outage at exchange Bitfinex all helped fuel these sharp price fluctuations.

When the week began on 17th June, bitcoin was trading at nearly $770, CoinDesk USD Bitcoin Price Index (BPI) figures reveal. However, the digital currency failed to "break through $800 and looked slightly overbought in the high $700s," said Athur Hayes, co-founder and CEO of bitcoin leverage trading platform BitMEX.

Over the next several trading sessions, bitcoin prices would fall sharply.

Ether suffered even sharper declines, and more than one market observer identified issues surrounding the smart contract-based funding vehicle The DAO as being the single greatest cause of this depreciation.

Petar Zivkovski, director of operations for bitcoin trading platform Whaleclub, said The DAO's loss of tens of millions of dollars worth of ether was "the main driver behind ETH's current price swings," while Xu Qing, spokesperson for Huobi, described the event as the "primary cause" of ether’s price fluctuation.

Ether enjoyed highly robust trading activity during the week, with trading volume setting an all-new record during one session.

Bitcoin’s downward momentum

Bitcoin prices suffered an 18.6% week-over week decline, BPI data shows, while ether plunged 32% during this period, according to Poloniex figures.

While bitcoin started the week off at $768.24 on 17th June, it fell to a closing value of $631.72 at 19:40 UTC on 21st June.

This gradual decline took place amid a short squeeze, as "many traders opened longs above the $700 level and the ensuing price dumps forced them out of their positions," Zivkovski told CoinDesk.

As falling prices forced speculators to close out their long positions, long exposure – as measured by position size – fell from 92% on 17th June to 65% on the 21st, additional Whaleclub figures show.

Bitcoin prices did enjoy some brief rallies during the week, rising to $678.22 between 12:45 and 12:59 UTC on 22nd June after nearing $630 the day before, according to the BPI.

The digital currency experienced another brief rise the following day, climbing to $597.80 at 07:30 UTC on 23rd June after falling to $551.92 at 1:30 UTC the same day. The currency experienced some more gyrations before opening on the 24th at $625.49.

While bitcoin fell nearly 18% in less than four sessions, ether plunged more than 50% in roughly 48 hours, dropping from an opening price of $20.50 on 17th June to $8.56 at 12:35 UTC on 18th June, according to Poloniex data.

Market participants traded $199.4m worth of ether on 17th June, CoinMarketCap figures show. This figure was more than three times the previous record of $65.3m set in March.

The following day, trading volume for ether was $132m.

DAO dilemma

The week's volatile trading activity took place as the ongoing situation surrounding The DAO continued to develop. To recap, the Ethereum-based project lost more than 3m ethers following an exploit of its smart contract code, an event that came after the initiative collected more than $150m in ether during a crowdsale.

In an effort to secure some of the lost funds, a group of ethereum developers launched a white hat attack in a bid to secure investor holdings. However, the distributed organization’s code was once again exploited, and as it stands ethereum's development community is currently weighing a network change that has drawn divided opinions thus far.

In spite of these challenges, the price of ether recovered to $13.91 by the end of the week.

"I’ve been surprised at how well ether has weathered The DAO hack," ARK Invest’s Chris Burniske told CoinDesk, adding:

"Certainly, it’s down significantly from its $20+ highs, but given the gravity of a potential hard fork I think the cryptocurrency is holding up remarkably well."


One major event that generated substantial visibility during the week was the Brexit vote. Britons flocked to the polls on 23rd June, participating in an event that drew a global audience.

During this time up to the vote, market experts repeatedly pointed to anticipation for the decision as affecting market sentiment, and therefore digital currencies.

When bitcoin prices fell below $600 on 23rd June and almost hit $550, investor and entrepreneur Vinny Lingham, Tim Enneking, chairman of Crypto Currency Fund and Arthur Hayes, co-founder and CEO of bitcoin leverage trading platform BitMEX all cited the impending 'Brexit' vote as causing the currency to fall 15% in five hours.

“It’s remarkable how closely bitcoin has ‘inversely tracked’ Brexit news over the last few days,” Burniske told CoinDesk. "It seems the markets are awakening to cryptocurrency as an asset class to be reckoned with, and due to its historically low correlation of returns, are using it as a ‘disaster hedge’ in times of capital market turmoil."

Yet, as it became clear that the UK was going to vote to leave the EU, bitcoin prices surged sharply, breaking $650 as the final results rolled in.

The vote's outcome also triggered sharp declines in the world's major stock markets.

What does this mean for the future of digital currency? And has it secured its place as a 'safe haven' asset? As recent reports show, only future trading sessions will decide.

Charles L. Bovaird II is a financial writer and consultant with strong knowledge of securities markets and investing concepts.

Follow Charles Bovaird on Twitter here.

Image via Shutterstock


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