The R1m bitcoin is now in sight. Where to now?

It was inevitable, say crypto watchers. The bull market is far from over, but it will be a bumpy ride.
Image: Chris Ratcliffe/Bloomberg

For the second time this year, crypto came within sniffing distance of R1 million this week. On international exchanges, it set new all-time highs on Wednesday, trading at $66 000.

By way of comparison, bitcoin traded at around R14 000 at the start of 2017, and ended that year at R310 000, before commencing a brutal 84% drawdown that took it all the way back to R50 000. It then started a long climb to R974 000, which is where it traded on Wednesday.

It came within a whisker of R1 million in April, but failed to cross that key hurdle, and instead lost roughly half it value over the subsequent months before bottoming out at around R445 000 in July.

Bitcoin’s ability to surprise to the upside remains undiminished. It has increased 70-fold since the start of 2017, with some analysts now pegging $80 000 and even $100 000 as the next price targets, with much of the momentum coming from news that bitcoin ETFs (exchange-traded funds) have been green-lighted by US regulators.

“(Reaching R1 million) was inevitable and we’re just beginning,” says Farzam Ehsani, CEO of crypto exchange VALR.

“Bitcoin and crypto are still a dot on the financial horizon of the world. It will continue to become more and more prominent with the passage of time.”

Says Marius Reitz, Africa GM for crypto exchange Luno: “The bitcoin price started trending at the beginning of the month when speculation began on the coin’s ETF approval. The first bitcoin ETF $BITO started trading this week and this news is being priced in. We’re seeing a lot of positive sentiment in the market, not only on the ETF side, but also bitcoin being recognised as legal tender in El Salvador and progress on the regulatory front. The cryptocurrency market remains volatile and the price isn’t guaranteed to only go up. We’ve seen many similar rallies and pullbacks over the years.”

Luno, like most exchanges in SA, has seen accelerating customer sign-ups as the crypto bull market builds a head of steam. It added more than one million new customers in just over four months, says Reitz, with some 30% of these coming from SA.

Adds Richard da Sousa, CEO of crypto exchange AltcoinTrader: “R1 million is not an international milestone, but it is for us South Africans. We’ve been predicting R1 million for bitcoin for many years, even though others were scoffing at the suggestion – but we’re just about there.”

Josh Miltz, co-founder of crypto investment company BitFund, says the R1 million bitcoin is something he expected would arrive sooner or later, and this makes it the sixth most valuable asset in the world.

A decade of records

“As the fastest growing asset class of the decade, returning 10 times more than the Nasdaq 100 on an annualised basis, bitcoin’s continued growth is not a surprise, except perhaps to regulators, who continue to frown upon one of the best assets in the market.

“Since 2011, bitcoin’s cumulative gains equate to a whopping 20 000 000%; 2013 was bitcoin’s best-performing year, during which it gained 5 507%.

“Bitcoin is the fastest asset to reach a $1 billion market capitalisation, which it did in 12 years,” says Miltz.

Bitcoin posted annualised losses for just two out of 12 years since it was launched, falling by 58% and 73% in 2014 and 2018 respectively. History suggests it is likely to continue growing, albeit with returns lower than previous years.

Adds Miltz: “In our view, as the cryptocurrency market continues to mature, and as innovation continues, bitcoin’s growth will drastically increase. It should come as no surprise that assets may, in the future, be priced in bitcoin, similar to how numerous other cryptocurrencies are now priced in bitcoin. As global citizens start pricing their financial systems in bitcoin as opposed to a fiat currency denomination, such as rands, we have no doubt that this will cause the price of bitcoin to increase and it will arguably become one of the most valuable assets on the planet. In fact, we believe that countries will either adopt bitcoin as a currency, like El Salvador has done, or invest their treasury reserves into bitcoin.”

While the R1 million-mark may be a way-stop to much higher prices, investors should expect bumps along the way. Trends can change and the volatility should be monitored by investors, says Miltz.

“It is easy to get caught up and fear missing out in a bull market, so all allocations to cryptocurrencies should be made with risk capital, and follow the principles of diversification to minimise risk.

“For this reason, we always recommend investing in cryptocurrency portfolios, to ensure a wide variety of exposure to various cryptocurrencies.”

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Cryptocurrency is linked to crime and money laundering. Last month, China banned all cryptocurrency transactions.

The reserve bank needs to protect the Rand, by also making cryptocurrency illegal.

You can’t stop progress. Go get yourself a crypto wallet.

Well the fundamental philosophy underlying (real) crypto currencies is to take monetary control away from governments and put it in the hands of people. So yes, China certainly would ban it as it is anathema to communist ideology. But crime? How much crime is transacted in fiat currencies? Did Julius and Floyd steal old people’s Bitcoin? Criminal abuse isn’t reason to ban something.
Oh, and if you want to protect the Rand, start by ridding our economy from Govt interference…

Now you want to protect the rand? What do you think will happen to the rand with those daft nationalistion the reserve bank ideas.

What is a bitcoin futures market etf? How does it operate?

Just buy BTC directly.

This ETF’s main purpose is to allow the scum of the financial world to pilfer fees off the asset. Bitcoin was in part created to bypass greedy middlemen and backward regulators.

Buying BTC on a crypto exchange incurs a small nominal fee split between the exchange and the miners. The ETF however, is loaded with extra fees. Someone “must” pay the ETF provider, the lawyers setting up the structures, the fund administrators, the auditors, etc.

Besides the extra fees, as far as the technology goes, a BTC ETF is akin to towing your smooth-running Tesla with diesel burning truck.

You’re paying extra “gas” fees

When I Google “What can I buy in South Africa using bitcoin” I see the results are very limited. I can buy Kruger rands, solar panels on a solar farm and a few other weird things.

So Bitcoin can’t be a currency. That means it must be an asset. So now I am going to google “What can I do with my Bitcoin”. I hope I get more results than “hold it or sell it”

“What can I do with my Bitcoin”?

You can brag to your friends in the hipster cocktail lounges in the CBD or the Camps Bay cafe drag that you’re trading in BC and you’re getting in on the ground floor … because there’s only one way and that’s up!

Enjoy the ride ….

I have Bitcoin and only regard it as a high risk part of my portfolio. Though many say it’s a currency, it really isn’t at this stage. Until I can use Bitcoin to buy goods and services from most if not all providers, it isn’t a currency.

And no those Bitcoin debit card providers do not count as they convert the Bitcoin to FIAT currency to then pay over to who ever you are paying, both parties need to accept the payment method to constitute a true currency. As long as there are intermediary parties and currencies in order to use your Bitcoin as a payment method it doesn’t count as a currency.

Warren Buffett got it right: the only sense in which crypto is an asset, is if you manage to convince the next guy that it is actually an asset, and sell it to him for a higher price than the guy who suckered you into buying it.

Much like tulips in 17th century Holland.

Are you willing to accept your salary payment in Bitcoin?

Salary in btc is def the way to go. Within the next decade cyberspace “companies” will come into existence.Already you say? These will however have avatar/anonymous contributors, may well have advanced AI. Supply chains will be tokenized, btc may well be the robot money. Contracts will be drawn up–but not via state or lawyer offices. Read up on smart contracts, the evolution of it . Good starting point is Nick Szabo. Things are changing exponentially, we are on the brink od developments that will make (the early) microsoft/google appear primitive. Stack Satoshis, learn about changes to come.

Satoshi (1/100 million of a bitcoin) ZAR parity how soon? Took 10 years to get here, all the action was in the last 4 years. Beware the ZAR has been a classic tulip case, I recall 2 dollars to 1 ZAR . And that debt mountain of the disintegrating American empire…..sustainable? Like Sensei says, USD is propped up by American Military might. China is changing its global tactics from being passive, introverted to “empire building” , agressive. Looking ahead —where to ? A few Krugerrands in a sealed drain pipe in the back yard? A few bitcoin in cyberspace? A self-sustainable property( solar/own water) in a secure area. Or no property, renting , picking location where to live(secure,stable, beneficial tax system, homogenous population with tendency to implement advanced robotics)

End of comments.

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