Bitcoin (BTC) reached a major milestone today, reaching over R100,000 per Bitcoin, despite just about every negative thing that could be thrown at it. The gains from Bitcoin has been remarkable as shown below:

The local Luno (Rand) Bitcoin gains (see live chart & news on our Crypto page) have been compounded by the depreciation in the Rand, and in a sense, just as with Zimbabwe, Venezuela and many other emerging nations with rapidly depreciating currencies, Bitcoin is seen as a currency hedge or wealth preserver by South Africans.

Despite the correction and panic caused by China banning ICO’s and Bitcoin exchanges, Jamie Dimons’ rant about Bitcoin being a fraud and the Russian Bitcoin ban, demand continues to outstrip supply. Because this is exactly what this rally is – demand exceeding supply – since Bitcoin supply is controlled by the algorithm and nobody else, releasing just 1,800 new Bitcoins a day. By the way, Chinese Yuan now accounts for less than 5% of global Bitcoin trading volume, which is a good thing in my books. Russia also produces volume LESS than that of South Africa.

Determining the exact causes of rallies or corrections is a mugs game, but I will bet the latest spurt has a lot to do with CME Group Inc, the world’s largest derivatives exchange operator, announcing the launch of a futures contract for bitcoin later this year, marking a major step in the digital currency’s path toward legitimacy, but more importantly, paving the way for institutional participation. Let us be clear here – if just 1% of institutional money finds its way to Bitcoin, we are looking north of $50,000 per Bitcoin (now $6,400). And the client pressure is on them – it’s becoming harder and harder for institutions to debunk Bitcoin when year after year, it keeps outperforming all the worlds’ currencies.

The chart below shows Bitcoins rise, punctuated regularly by healthy 30-35% corrections, in a classic bull-market pattern of repeated higher lows and higher highs. This means if you bide your time, and see corrections of 25-30%, you could still theoretically get onboard the train. Until I get to a party or function where at least half the room OWNS Bitcoin, I will keep buying these dips! Do the excersise at your next function or get-together. Ignore those talking about it, focus on those who have actually made the leap to BUYING Bitcoin.

Bitcoin accounts for more than half of all cryptocurrency market capitalisation and at $110Bn is now larger than Goldman Sachs, Morgan Stanley, General Motors, Tesla, T-Mobile, FedEx and Sony and trading roughly $2-$3bn in volume every day.

The potential for Bitcoin gaining from small doses of institutional money provides such an asymmetric risk/reward equation to traditional assets that, as we have shown here, even a small 5% exposure to Bitcoin could have boosted your traditional portfolio returns some 400%.

Now lest you think the current rally is out of the ordinary – it’s not. Below is the current rally compared to the prior three – we are actually slightly under-par!

Bitcoin purchases in South Africa are reaching speculative levels though, and cannot be explained by the Bitcoin price rise in Dollars alone. Saffers are now paying a 15% premium to get their hands-on Bitcoin through Luno. Whilst this is offering the SA Crypto club members great arb-trades at the moment (buying cheap Bitcoin on overseas exchanges and selling them for 15-20% more on Luno to bank risk-free, guaranteed profits), it’s also a warning this current bull run may be nearing its sunset days or at the very least reaching frothy levels.

If you would like to join the first and only SA Crypto Club, that focusses on crypto investing, crypto mining, trading and arbitration methods, contact Megan on 021-700-4823 or megan@sharenet.co.za



Dwaine van Vuuren

Retail-side Research

RecessionAlert, Sharenet Analytics



Dwaine van Vuuren is a full-time trader, global investor and stock-market researcher. His passion for numbers and keen research & analytic ability has helped grow RecessionALERT.com (US based) and PowerStocks Research (now Sharenet Analytics) into companies used by hundreds of hedge funds, brokerage firms, financial advisers and private investors around the world. An enthusiastic educator, he will have you trading and investing with confidence & discipline.