Cryptocurrency market cap leader Bitcoin is approaching the R1.04 million all time high recorded during the 2021 bull market and is currently trading on Luno at R998,974. The milestone followed a week-long rally which saw Bitcoin up by around 20% over the week.
In US dollar terms, however, Bitcoin is currently trading around $52,000 – still a way off from the dollar all-time high of $65,000.
Christo de Wit, Luno’s country manager for South Africa, comments, “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 proponents that Bitcoin serves as a store of value.”
Renewed investor confidence was buoyed by the performance 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 January 10.
Bitcoin’s market capitalisation – the total of all Bitcoins in issue – yesterday surpassed $1-trillion, amid recent traditional market unrest 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 evidence of 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,” says 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.
De Wit notes changing dynamics on Luno, with altcoin Solana replacing XRP in third position after Bitcoin and Ether over the past two months. “While XRP continues to be one of the top coins traded on Luno, this could point to new cycles and patterns in the crypto market,” he said.
