South African crypto-currency exchanges believe profit-taking after Bitcoin’s recent rally is the biggest reason the world’s largest digital currency has seen a plunge in value in the past weeks.
Bitcoin has fallen to a seven-month low after dropping below $90 000 (R1.5 million), wiping out much of its gains for the year.
Last month, the crypto-currency reached an all-time high of $125 000 (R2.1 million). According to CoinGecko, roughly $1.2 trillion has been erased from the total value of the global crypto-currency market over the past six weeks.
The crypto-currency is currently trading at around $92 296 (R1.58 million), showing a slight recovery after its steep slide.
Frank Leonette, CEO of local exchange Afridax, says profit-taking after Bitcoin’s recent rally, a wave of leveraged positions being liquidated, coupled with some broader market uncertainty, are the biggest reasons for the price drop.
“It’s a combination of typical crypto and traditional market factors rather than one single event. Bitcoin generally has a cycle, and we may be seeing the end of the bull run; however, the climate is dramatically different than previous cycles. Regulation has paved the way forward and institutional investors are continuing to channel large amounts of funds into crypto markets and related technologies,” says Leonette.
Tech stock parallel
Ben Caselin, CMO at local exchange VALR, concurs, saying the primary driver is rising investor caution in traditional markets, particularly profit-taking in overvalued artificial intelligence (AI)-related technology stocks.
According to Caselin, crypto-currencies, as other risk assets, are highly correlated with tech stocks during risk-off periods, amplifying the decline.
“Additionally, fears that the US Federal Reserve may skip a December interest rate cut, contrary to earlier expectations, have heightened market anxiety,” he notes.
“Another point to note is that these price dynamics are not completely unexpected from the perspective of Bitcoin’s four-year cycle, and more downside is certainly possible and could even be prolonged. However, there is also a possibility that once macro conditions turn favourable that we will see the cycle extended with new highs reached in early 2026.”
Christo de Wit, Luno country manager for South Africa, says: “We are seeing significant volatility in the crypto market, with Bitcoin losing around 27% in just over six weeks, pushing crypto into a bear market. But this isn't just a crypto story. The broader market is under pressure too. Tech stocks are being hammered.
“We’re seeing a broad risk-off shift. Investors are moving away from speculative assets – whether that's crypto, AI stocks, or tech generally.”
De Wit attributes the recent plunge in Bitcoin and other crypto-currencies to several factors, including investor focus on the payout of nearly $9 billion to users of the collapsed Bitcoin exchange Mt Gox, institutional profit-taking ahead of year-end, waning expectations of a Federal Reserve rate cut in December, and lingering uncertainty from the US government shutdown, which delayed key economic data.
He also notes that substantial electronic-traded fund (ETF) outflows have occurred as large investors lock in profits following the extraordinary rally after Donald Trump’s election victory, with much of that momentum now reversing.
Describing South African traders’ response to the value depreciation, Caselin says many are holding positions amid uncertainty, with some taking profits or reducing exposure to avoid further losses.
“While new sign-ups have slowed down, indicating reduced retail interest, investors who’ve been in the market for longer may view this as a buying opportunity if macro conditions stabilise, but caution prevails without clearer signals,” he comments.
For Leonette, active traders have been buying the dip and taking advantage of the volatility, while most long-term holders have stayed calm and kept their positions.
“Savvy traders will buy Bitcoin when fear is at its highest and sell when the market turns to greed – probably the only two indicators you will ever need as a retail investor. Currently, the market sentiment is extreme fear.”
De Wit says whenever there is market volatility, as now, Luno sees increased trading across the platform as traders take advantage of price swings.
Bellwether warning
The local exchanges note the decline in Bitcoin has also weighed on other crypto-currencies, as most altcoins tend to follow Bitcoin’s movements.
“The slump has broadly impacted the crypto market, with altcoins and other digital assets experiencing similar or steeper declines due to Bitcoin’s role as the sector's bellwether. Risk aversion in correlated assets like tech stocks has led to synchronised selling pressure across crypto-currencies,” Caselin comments.
They also believe price volatility will continue, with Leonette saying Bitcoin continues to be a highly volatile asset, and sharp price swings are normal.
“More movement should be expected due to many external factors. Quantitative easing, monetary policy shifts, rate cuts and liquidity changes in the US could trigger further swings. This cycle is different than before and Bitcoin historical price cycles may not be relevant this time round.
“These pullbacks are common in crypto markets. Staying informed, avoiding emotional decisions, and keeping a long-term perspective generally helps manage the ups and downs,” he says.
De Wit agrees, noting volatility is inherent to crypto markets. “Today’s US jobs report could be pivotal in reshaping investor sentiment. For South African investors, Luno recommends taking a long-term view and avoiding emotional decisions driven by short-term price swings.”
Caselin adds that volatility is likely to persist in the coming weeks, driven by ongoing instability in the technology sector and the absence of clear macro-economic catalysts.
He points out that Bitcoin’s position within an ascending channel suggests potential for continued growth if confirmed, but without a breakout above $105 000 or consolidation above $100 000, selling on rebounds will dominate, keeping swings pronounced.
“This downturn aligns with the traditional autumn profit-taking phase in Bitcoin's four-year cycle, often followed by recovery.
“A December rally remains plausible if the US Federal Reserve signals rate cuts and US economic data shows strength against inflation. High ETF demand could propel Bitcoin back above $110 000 by year-end 2025, potentially reaching $130 000 to $140 000 in Q1 2026, but for this to happen macro conditions would need to turn markedly favourable,” Caselin comments.
Imraan Moola, chief Investment officer at Ovex, notes that South African investors have, unfortunately, seen a dual impact.
“Firstly, a stronger rand in recent months has lowered the Bitcoin price locally, and then coupled with the recent drop in Bitcoin in dollar, has exacerbated this drop in local currency terms. Traders have, so far, not had convincing enough of a move higher to step in and buy the dip and so remain cautiously optimistic.”
He adds that given the volatility in traditional finance markets being elevated, the market should expect to see Bitcoin price volatility continue in the near-term.
“This does not have to mean it will be to the downside, and in fact in many instances, we have seen Bitcoin price moves more pronounced on rebounds after a drop. The drop so far (just over 30%) is by no means the largest we've seen in this bull market even, but also shows how fast things can be run back up again after drops like this,” Moola says.
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