Bitcoin hits R1 million – nears rand all-time high 

Bitcoin Rand

Bitcoin hit the R1 million milestone on South Africa’s major cryptocurrency exchanges early Thursday morning, nearing its rand value all-time high of R1.04 million. 

The milestone followed a week-long rally that saw Bitcoin up by around 20% over the week. The price of Bitcoin has since moderated to just below R1 million to R988,645 at the time of publication.

This is near its all-time high rand value of R1.04 million. In US dollar terms, however, Bitcoin is currently trading around $52,000 – still a way off from the dollar’s all-time high of $65,000.

“The difference is indicative of the rand’s devaluation against the US dollar over the last five years and adds legitimacy to the argument that Bitcoin serves as a store of value,” Christo de Wit, Luno’s country manager for South Africa, said. 

Investor confidence was buoyed by the performance of Bitcoin exchange-traded funds (ETFs) in the US. 

These funds have attracted over $34 billion from investors since being approved by the US Securities and Exchange Commission on January 10.

Bitcoin’s market capitalisation surpassed $1 trillion yesterday amid recent traditional market volatility fueled by higher-than-expected CPI inflation data in the US. 

Several analysts anticipate continued growth on the back of ongoing bullish sentiment.

The influx of institutional money via ETFs is seen as a positive shift in how cryptocurrencies are viewed by traditional investment institutions.

“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 that an infinite supply of Bitcoin doesn’t erode its value further down the line. Each previous halving has historically had a major impact on the price,” said De Wit.

The first halving saw price increases of more than 8,000% from pre-halving levels. Bitcoin’s value also increased roughly 3,000% over the second halving cycle in 2016. 

The last halving in 2020 was followed by a bull run that ended in an all-time high price of almost $65,000.

Luno’s country manager for South Africa, Christo de Wit

De Wit previously told Daily Investor that cryptocurrencies are benefitting from enhanced legitimacy given to them by regulators. 

“I think there initially was a lot of confusion, and a lot of people did not understand, you know, what cryptocurrencies and what Bitcoin was,” De Wit said.

However, research from the Financial Sector Conduct Authority (FSCA) revealed that over 5.8 million South Africans own crypto assets, with Bitcoin being the most popular.

“I don’t think that by any means crypto is in the mainstream yet, but it is growing strongly in South Africa, and this will only accelerate in the coming years,” he said. 

De Wit said widespread adoption of cryptocurrencies will first come as a result of it being used as an alternative asset class in which South Africans can invest. 

This perception is key to getting a majority of South Africans to hold, invest in, and interact with crypto. 

The driving force behind this shift in perception is the declaration of crypto as a financial product by the FSCA in October 2022 and the creation of a regulatory framework around it. 

De Wit explained that South Africa’s regulators have taken a proactive approach with regard to crypto and have engaged with the sector for several years. 

Licences from the FSCA are pending for several crypto providers, including Luno. De Wit expects an announcement to be made soon regarding the awarding of licences. 

The FSCA and other financial regulators have not clamped down on crypto as some of their international peers have. 

De Wit said the approach of banning crypto mining and trading is counterproductive as all it does is push crypto activity into the black market with no oversight.