A senior investment executive at Rand Merchant Investments says that Bitcoin’s volatility will continue in 2018, but it could begin to emerge as a payment system in South Africa.
Having soared more than 1,500% in 2017, Bitcoin has experienced extreme levels of volatility since mid-December. From a peak of nearly $20,000, the largest digital currency traded at around $11,000 on Wednesday, having lost as much as 26% Tuesday.
Bloomberg reported that speculators across the globe are struggling to determine when or how market watchdogs may rein in an industry that’s decentralized and derives much of its value from anonymous ownership.
Many assertions that digital coins represent a bubble have triggered double-digit selloffs over the past year, only to be followed by rebounds.
Dominique Collett, a senior investment executive at RMI and the head of AlphaCode, said: “Bitcoin has been highly volatile over the last month and there are many naysayers calling it a bubble, but Bitcoin has always been volatile and has been called a bubble since the price was $1,000 dollars.
“There are highly rated analysts who believe it could reach $50,000 this year. There is no doubt that speculation is driving the price up – it is a highly risky asset class, yet it can no longer be ignored.
“It’s considered a store of value and I believe that the price still has a way to run. Bitcoin now has a market cap of $230 billion, this is larger than Goldman Sachs and Morgan Stanley combined.”
Collett pointed out that the digital currency is starting to be taken seriously by Wall Street and Silicon Valley. “We are also starting to see the large asset managers saying that they believe their clients should be exposed to Bitcoin and are looking to structure Bitcoin funds. Serious institutional money is starting to consider Bitcoin, and it can’t be ignored.”
He said that for Bitcoin to be used as a payment mechanism or remittance, people first need to be aware of it. That is what 2017 accomplished. “So we will see more experimentation and trials from businesses like Pick ‘n Pay, which piloted whether they could accept Bitcoin,” he said.
“This year, we expect to see more pilots and experiments opening onto the Bitcoin rails to see whether customers are open to using Bitcoin as a day to day payment mechanism. I believe that while the volatility will continue, in 2018 Bitcoin could begin to emerge as a payment system,” Collett said.
Last week, Red & Yellow, which has campuses in both Cape Town and Johannesburg, said it would accept Bitcoin as payment for all degrees, advanced diplomas, certificates and online courses.
Online classifieds site Gumtree says it has seen an increase in the number of South Africans swapping their cars and other high-value items for Bitcoin.
The group said that there’s been an increase in swaps and Bitcoin-only sales on the site, particularly in trades for high-value items like cars, bikes and boats.
Neil Roets, CEO of debt counselling company, Debt Rescue, warned that a rapidly growing number of deeply indebted consumers are getting themselves into financial trouble by investing in cryptocurrencies including Bitcoin and Ripple.
“We interviewed our first cryptocurrency victims towards the end of last year who wanted to go under debt review because they were no longer able to adequately service their debt.
“To my amazement, many of them had been the victims of scams involving cryptocurrencies which promised massive returns.
“Some of them had gone as far as pawning their vehicles, taking out second bonds on their homes and borrowing money on credit cards in order to buy cryptocurrencies,” Roets said.
The South African Revenue Service (SARS) has meanwhile said that it plans to provide clarity on the tax implications of transacting in cryptocurrencies like Bitcoin in either an interpretation or practice note early this year.