Bitcoin teases R1m mark
ATTRACTION: RALLIES 20% OVER PAST WEEK
SA crypto exchanges saw BTC touching R997 000 at one point on Wednesday.
Bitcoin came within a whisker of R1 million on Wednesday, returning to levels last seen in November 2021 and within shooting distance of its all-time high of R1.06 million. That’s the story in rands. In US dollars, bitcoin (BTC) traded on Wednesday at $51 500 (about R971 000), roughly 21% off its all-time high above $65 000, which it touched in November 2021. The difference is one of currency depreciation.
“The difference is indicative of the rand’s devaluation against the US dollar over the last five years and adds legitimacy to the argument by many that bitcoin serves as a store of value,” says Christo de Wit, Luno’s country manager for South Africa.
The rand was trading at R15.70 to the US dollar in November 2021, against R19.07 this week, a difference of about 21%.
South African crypto exchanges saw BTC touching R997 000 at one point on Wednesday after a 20% rally over the previous week.
Just nine years ago, BTC was trading at R4 500 on the few local exchanges such as Luno that offered it.
With the price now at around R1 million, those lucky enough to have purchased it back in 2013 and 2014 have seen a roughly 220-fold increase in price.
“It’s really exciting to see bitcoin making moves to approach its all-time high in ZAR terms, where it traded at R1 060 000 on VALR in 2021,” says Gianluca Sacco, chief operating officer at crypto exchange VALR.
“Perhaps even more impressive is the fact that bitcoin has once again breached a trillion dollars in market capitalisation, joining a very small group of assets.
“This highlights the fact that bitcoin is gaining global relevance as both an important technological innovation and the first truly decentralised form of money.”
Investor confidence has been boosted by arrival of bitcoin exchange-traded funds (ETFs), which have attracted over $34 billion from investors since being approved by the US Securities and Exchange Commission on 10 January.
This signals the long-awaited arrival of institutional funds into an asset class previously derided by many in traditional finance.
Sacco says it’s hard to overstate the importance of bitcoin ETFs for bitcoin adoption.
“The asset management industry controls the lion’s share of wealth in developed markets and these professionals now have a clear road to offering spot bitcoin investment to their full client base, who have many trillions of dollars in assets to invest.”
Some of the world’s largest asset managers have launched bitcoin spot ETFs (bitcoin futures ETFs were previously available) within the last month. These include ARK, Bitwise, Blackrock, Fidelity, Franklin Templeton and Grayscale.
De Wit says one of the reasons for bitcoin’s market cap surging past $1 trillion was the higher-than-expected inflation data in the US.
“Several analysts anticipate continued growth on the back of ongoing bullish sentiment,” he adds.
“Another potential reason for the price uptick is the bitcoin halving expected to take place mid-April 2024.
“Roughly every four years, Bitcoin rewards paid to miners are cut in half as a way to ensure an infinite supply doesn’t erode its value further down the line,” says De Wit. “Each previous halving has historically had a major impact on the price.”
Halvings are typically associated with price rallies and this one is turning out to be no different.
Bitcoin is gaining global relevance