TOKYO -- The British vote to exit the European Union seems to have benefited bitcoin amid a stampede out of the pound and the euro, though many see Chinese money accounting for much of the digital currency's rise.
Bitcoin surged Friday morning, Japan time, as the Brexit camp was winning in the referendum, data from the CoinDesk cryptocurrency news website shows.
The currency had fallen as far as 20% to $553 on Thursday, when the pro-EU camp had been expected to prevail. But it rebounded the next day, climbing 22% from that low to $675. Traders expected some of the speculative money flowing out of the pound and the euro to make its way to bitcoin.
The yuan in particular attracted much attention. China's tight restrictions on currency trading keep investors from freely buying dollars or yen. The looser rules governing bitcoin have made it a frequent outlet for speculators.
With the yuan's weakness promoting buying of bitcoin as well, some market players see speculation by Chinese traders as a factor behind the digital currency's recent climb. Even before this, around 80% of bitcoin trading reportedly involved yuan.
Another period of volatility for bitcoin came in March 2013, during Cyprus' financial crisis. When the eurozone country imposed capital controls to prevent bank runs, including a deposit freeze, many wealthy depositors bought bitcoin. The cryptocurrency more than doubled in two weeks from around $40 to $90.
Bitcoin has seen wild swings since the Brexit vote, reaching nearly $690 at one point before dropping back to around $650. This owes partly to the small scale of the market. Though some 14 million investors trade in bitcoin, its market cap totals just $10 billion or so.
With worldwide foreign exchange turnover believed to exceed $5 trillion a day, the bitcoin market is far too small for British pension funds and other investors with substantial pound-denominated assets to take shelter from sterling's plunge. Smaller markets are prone to sharper price swings.