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Elon Musk’s Bitcoin touch lifts SA crypto exchanges

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Tesla CEO Elon Musk.
Tesla CEO Elon Musk.

South African-based crypto-currency players are bullish about the prospect of Bitcoin – the world’s most popular digital currency – reaching the historic $50 000 (R700 000) mark.

The massive surge in the price of Bitcoin was recently propelled after South African-born Elon Musk’s Tesla bought $1.5 billion in the crypto-currency.

The company has also indicated it will, in future, start accepting Bitcoin as a payment method. Other big-name companies that have embraced Bitcoin include the likes of PayPal and Square.

Today, multinational financial services firm Mastercard also said it will this year start accepting some crypto-currencies on its network.

Bitcoin was driven to new record highs this week – trading above $48 000 – as investors continued to pile in after the Tesla Bitcoin news.

The $1.5 billion reality

With all these developments, local crypto players are reporting a huge increase in digital currency transactions on their platforms.

Farzam Ehsani, CEO and co-founder of crypto exchange VALR, says the fact that Tesla, one of the most valuable and forward-thinking companies in the world, bought $1.5 billion worth of Bitcoin in January is a reality that no CEO or company can ignore any longer.

“Elon Musk has not only told the world that he supports Bitcoin, but he has placed 8% of the cash and cash equivalents of Tesla's balance sheet into Bitcoin,” says Ehsani.

“This is huge news. Furthermore, the fact that Tesla has announced they will be accepting Bitcoin as a payment mechanism, and possibly will hold these payments in Bitcoin and not convert them to USD, is testament to a positive view of where the value of Bitcoin is expected to go versus the US dollar.”

Marius Reitz, Luno GM for Africa, concurs, saying tweets last week by Musk, who is the world’s richest man, increased interest and purchases of crypto.

He notes a Tesla SEC-filing revealed the company had allocated $1.5 billion of its cash balance to Bitcoin in January.

In this same SEC-filing announcement, the company indicated its intention to begin accepting Bitcoin as a form of payment for its products in the near future, Reitz says.

He adds that Tesla’s investment of 43 000 BTC equals 0.23% of the total circulating supply of Bitcoin, turning Tesla into one of the major whales in the market.

“This kind of institutional buying power is likely to lead to greater crypto-currency exposure by other business giants and no doubt contributed to the all-time highs of both Bitcoin and Ethereum.

“Traditionally, investors in Bitcoin have been the enthusiasts – individual investors who banked on the currency as the future of money. We are now seeing more institutional investment, with greater investments and interest in crypto from some of the biggest names in the business,” Reitz says.

Says Richard de Sousa, CEO of AltCoinTrader: “Obviously when the world’s richest man takes a stance and endorses a product, people notice and they want to get involved with that product.”

He notes Bitcoin has been given the stamp of approval by arguably the most successful man in the world.

“In addition, anyone who was thinking that Bitcoin was a scam, or saying they were not sure about this alternative financial system can no longer – with the same mind – debate this topic because they will be putting their opinion above the cream of the crop as well as the most successful and richest minds.”

With Musk’s endorsement of Bitcoin, De Sousa believes the digital currency has now officially gone mainstream.

Sean Sanders, CEO and co-founder of Revix, notes Musk has undoubtedly fuelled greater interest in Bitcoin and driven prices higher.

“This is the biggest news in crypto since it all first began in 2009 with the Bitcoin Whitepaper. Tesla’s $1.5 billion Bitcoin purchase could open the doors for thousands of other blue-chip corporates to consider adding Bitcoin to their balance sheets,” says Sanders.

“There’s no doubt in my mind that in the coming weeks and months, we’ll see many more Fortune 500 companies making similar announcements and diversify their cash balances out of USD and into BTC.”

Burgeoning volumes

The local crypto-currency players are also enjoying a bull run amid the growing interest in the Bitcoin thanks to the Musk touch.

At VALR, Ehsani points out the company is seeing more and more people and companies signing up to the platform.

“Our volumes have been increasing and our customer base increased nearly seven times in 2020 and we expect this trend to continue in 2021,” he says.

Likewise, Reitz says: “We are seeing significant growth in new customers in South Africa and have now reached the milestone of six million wallets worldwide. New market participants continue to enter the Bitcoin market and more money is changing hands on Luno’s exchange than ever before.

“The number of engaged customers has almost doubled over the past 30 days and volumes traded – both overall and per customer – are also significantly higher. South Africa ranks in the top five countries globally in terms of high rates of crypto-currency ownership, according to Statista.”

At AltCoinTrader, De Sousa says SA’s oldest crypto exchange is witnessing a “healthy adoption of clients and the amount of people interested in crypto-currency as well as new users”.

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