Bitcoin bursts through R1.2 million mark

Henry

The cryptocurrency Bitcoin broke through the R1 million mark again last week to reach its highest rand trading level ever. This cyber currency traded at a rapid rate of more than R1.17 million on Friday morning, after trading above the level of R1.2 million on leap day.

There seems to be no stopping this wild horse’s gallop. Bitcoin’s value has increased by 175% since March 1 last year from R428 000. The largest increase occurred over the past month. This unit was still trading around R800 000 on 1 February and was more than 47% higher at R1 177 000 on 1 March. Measured over a five-year period, Bitcoin’s price has increased by more than 1 980% since 1 March 2019’s level of R56 000 shot up.

In dollar terms, Bitcoin’s value was just over $61,000 on Friday morning, March 1, and within range of its all-time dollar high in November 2021. A year ago, this cryptocurrency was trading at just over $23,000 in dollar terms. This represents a year-on-year increase of 160% and an increase of more than 1,470% over the past five years.

In November 2019, the rand was still trading at around R14 against the American currency and has since lost ground to more than R19 per dollar – hence the huge rise in Bitcoin’s rand value.

According to Christo de Wit, the crypto trading platform Luno’s South African head, the devaluation of the rand against the US dollar over the past five years confirms the sentiment of many that Bitcoin is a valuable investment tool.

“Bitcoin’s market cap – the total of all issued Bitcoins – recently passed the $1.2 trillion mark (trillion) surpassed and several analysts expect continued growth. Renewed investor confidence has been boosted by the performance of Bitcoin exchange-traded funds (ETFs), which have attracted more than $34 billion from investors since they were approved by the US Securities and Exchange Commission on January 10.

“The inflow of institutional money via ETFs is proof that cryptocurrencies are viewed much more positively by traditional investment institutions.”

RNews reported earlier that the so-called BTC halving event in April this year is expected to have a significant effect on the price of Bitcoin. A halving event refers to a period every four years or so when the compensation for mining (or mining) Bitcoin is halved.

Halving results in a lower supply with less Bitcoin being made available, which in turn leads to higher prices. This prevents an unlimited circulation of this unit from eroding the value. The first halving took place in November 2012. The next was in July 2016, and the most recent one in May 2020.

This mining reward started at 50 BTC per block when Bitcoin was created in 2009. As things stand now, those who mine Bitcoin receive 6.25 Bitcoin, which could therefore drop to 3.125 in April. There will eventually be only 21 million Bitcoin in circulation. Almost 19.6 million Bitcoin have already been mined, which means that only 1.4 million can still be mined.

“The first halving saw price increases of more than 8,000%. Bitcoin’s value also increased by around 3,000% with the second halving cycle in 2016. The last halving in 2020 was followed by a bull run that ended at an all-time high of almost $65,000,” says De Wit.

Analysts expect the price of Bitcoin to break through the $69,000 level in March. Others predict the unit could peak at $140,000 in 2025 and trade as high as between $300,000 and $350,000 by 2030.

According to Statista, approximately 10.24 million South Africans, or 16.7% of the population, currently have cryptocurrency in a digital wallet. That number is expected to rise to more than 15 million by 2028.