As the local currency breaks the key R18 to the dollar barrier – its strongest level since the end of September last year when it looked like it may drop below R17 – South African cyber currency investors are seeing a decline in the value of Bitcoin in rand in their investment portfolios.
Bitcoin has been on an upward trajectory and hit an all-time high of $111 891.30 a cyber coin (more than R2 million against the greenback at the time) on 22 May. Although it has pulled back somewhat from this high, it is at $105 646 as of Monday morning.
There is speculation from market intelligence platform Santiment that the cyber currency may hit a new high this week. It recently noted on X: “Is this the week we see Bitcoin challenge the $112 000 all-time high?”
Coincodex.com predicts that the crypto-currency could go to $137 680 by 14 June, before stabilising at $117 594 in about a month’s time.
Fundstrat Global Advisors CEO and Wall Street trader Tom Lee recently told CNBC that the coins could go to $150 000 by the end of the year.
Binance has the virtual currency reaching almost $135 000 acoin by 2030.
At the same time, the rand is expected to continue gaining ground against the dollar, with economy forecast agency Rand Forecast pegging it at R17.21 to the dollar in a month and flirting with R15 by the end of next year. Old Mutual chief economist Johann Els has a forecast of between R16.99 and R16.00 in the next three to six months.
As of 10am on Monday morning, the local currency was trading at R17.71 to the greenback, based on Morningstar data.
Christo de Wit, Luno country manager for South Africa, explains that markets can be driven by completely different factors. “Rapid changes in either market can be triggered by the global financial landscape, with macro-economic shifts, geopolitical tensions and evolving market sentiment,” he says.
David Porter, AltCoinTrader general manager, warns that a stronger local currency will adversely affect local portfolios. “A strengthening rand will put slight downward pressure on globally-priced assets such as gold and Bitcoin,” he said. “The local prices would reflect the stronger rand.”
ITWeb’s calculations show that, assuming a flat rate for Bitcoin of $100 000, it will be worth R1.7 million. At R15 to the dollar, the value of one coin will drop in value to R1.5 million.
Despite this, Porter believes it is difficult to see a strong or strengthening rand outweighing the potential upside to the asset price. “Local investors need to decide if they believe the rand will further strengthen, and to what degree, in light of the economic headwinds the country faces.”
Porter says Bitcoin is “clearly displaying resilience in a jittery global market,” which is “uncertain about the impact of tariffs or where the next salvo from the Trump administration may come from”.
Key factors driving Bitcoin’s resilience include the adoption of Bitcoin exchange-traded funds in larger financial markets such as the US, even though there has recently been a small selloff or profit-taking at recent highs, notes Porter.
“Another important factor is the growing number of institutions globally adopting Bitcoin as a balance sheet asset, often actively seeking to raise further capital to increase their Bitcoin holdings to shield their balance sheets from inflating currencies.”
In February, Altvest Capital said it became the first African company to adopt a Bitcoin treasury strategy, following the footsteps of Strategy in the US and Metaplanet in Japan. The company said it saw Bitcoin as a hedge against economic volatility, and that the crypto-currency would protect its holders from inflation and the depreciation of fiat currencies – such as the rand.
Altvest CEO Warren Wheatley said at the time: “Bitcoin is fundamentally different from other digital assets. It is the only truly decentralised, scarce and globally-recognised digital asset that aligns with Altvest’s investment philosophy.”
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