Bitcoin in South Africa: a new safe-haven asset
Bitcoin popularity on the rise
Historically, Bitcoin has been a very attractive investment vehicle in times of economic uncertainty and therefore it’s always a hit in emerging economies with liquidity issues. The South African rand seems to be struggling for a long time now and considering it’s currently trading at 0.0691 versus the USD – it doesn’t come as a surprise that alternative investments are becoming more compelling.
In fact, the stats from various surveys show that South Africa ranks at the top of the list of countries with the highest Bitcoin adoption numbers. More than 10% of the country’s population owns Bitcoin and even more are using Bitcoin trading as a speculative instrument to generate additional income.
However, the recent volatility and bearish sentiment in the Bitcoin market has started taking a toll on South African investors’ confidence. When you have limited disposable income and your local currency is practically worthless in the global arena, watching your investment drop by a couple of percentage points each week can be very disheartening. Bitcoin trading volume is going up though and it won’t be long until the price reels back to the key psychological level of USD 10.000.
Aside from Bitcoin trading and holding, South Africans also have found that the coin is the perfect form of payment for online gambling. Being largely unregulated and private to some degree, Bitcoin has been the currency of choice for online betting games as well as sporting events.
If you don’t want to buy, hold and wait for Bitcoin to start surging again, the easiest and most efficient way to get exposure into the crypto market is by trading bitcoin CFDs. A CFD (contract for difference) allows you to speculate on the price of Bitcoin compared to that of the dollar and realize substantial profits in case your speculation proves accurate.
An example of a winning trade:
You go long or buy BTC/USD at 9974.08 since you believe that in the next few hours the value of Bitcoin will appreciate versus the dollar. After a couple of hours, the chart shows an uptick and the new rate goes up to 9975.03. This means that you were correct in your assessment and each point of upwards movement will be translated into profit in your trading account depending on how many units of BTC/USD you bought.
As you can see, there’s always a 50% chance to win or lose with any trade you place in the market, but you don’t need to go long or buy BTC units to make a profit – instead you can go short or sell. This means that you can speculate that the Bitcoin price will drop compared to the dollar and for every point the cryptocurrency devaluates, you will be rewarded.
How to make Bitcoin forecasts
Trading Bitcoin in South Africa with a forex broker is easier since the trading platform provides you with the necessary tools to help you make accurate price forecasts via the technical indicators that come installed by default. Technical indicators analyze historical market data and provide a graphical representation on the price chart that can sometimes show you the direction the market is headed as well as help you identify key support and resistance areas that the price cannot break out from. Using these indicators and monitoring the market for repeating movement patterns is called technical analysis.
There are, however, other economic indicators that can provide insights regarding the market’s future direction. Bitcoin is quite a volatile asset and its particularly vulnerable to the market sentiment. When the market is optimistic about cryptocurrencies in general, then the trading volume goes up, demand increases and the price skyrockets.
Therefore, Bitcoin traders and investors need to follow the news around cryptocurrencies and stay up-to-date with the latest blockchain developments. Fundamental analysis refers to paying attention to all these indicators and economic events that can affect a tradable asset.
Since Bitcoin is considered the rival of the fiat currencies and specifically the USD – you will quickly realize that its performance counters that of the dollar and they usually move in the opposite direction. So, when the dollar is weak, Bitcoin is usually trending upwards since investors are more likely to diversify their portfolios in alternative asset classes.
Unfortunately, however, 2019 is poised to become one of the best years for the U.S economy and with all other countries in the developed world struggling to keep up, the dollar is surging even higher every day. As such Bitcoin is starting to cede ground to the dollar but the fundamentals are strong and a reversal may be just around the corner.