Bitcoin’s roller coaster ride in South Africa

Bitcoin and other cryptocurrencies have seen momentous swings in value over the past year, quickly emerging from obscurity onto the public stage.

An indication of these price swings – and the excitement surrounding them – is that one of the most popular live price trackers for Bitcoin is an adaptive gif of a cartoon token on a roller coaster.

The comparison is apt, as Bitcoin’s volatility over the last year has gained many investors wild profits, and many more significant losses.

A lack of regulation surrounding the trading of cryptocurrencies make them vulnerable to manipulation, causing many traditional investors to label Bitcoin a “get-rich-quick scheme” or a bubble waiting to pop.

This “bubble” has deflated somewhat in recent months, with Bitcoin falling to values not seen since October last year – but still showing year-on-year gains of over 500%.

According to price information from South African exchange Luno, Bitcoin was valued at R15,242 on 15 March 2017.

At the time of writing – 15 March 2018 – the cryptocurrency is now worth R99,437.

Bitcoin year price graph luno

Hype train

The fervour surrounding Bitcoin ramped up throughout the second half of 2017, culminating at the end of the year when the coin reached an all-time high.

The price of Bitcoin hit R254,000 on 14 December 2017 – doubling its value in just under a month.

Cryptocurrencies had become a hot topic across mainstream media, with stories circulating of early investors who became overnight millionaires.

Initial Coin Offerings (ICOs) also became increasingly popular, with investors looking to cash in on risky projects with potential for massive returns.

The hype surrounding the cryptocurrency market infected traditional investors, too, with many companies seeing a massive growth in their share price after changing their name to include the phrases “blockchain”, “fintech”, or “cryptocurrency”.

Scammers and criminals also found a lucrative market in cryptocurrencies, with ponzi schemes like Bitconnect and exit scams like BTC Global preying on newcomers to the market.

The hype surrounding cryptocurrencies has deflated somewhat in 2018, however, along with the values of most coins.

Google search trends data shows that the amount of people searching for Bitcoin-related content has decreased substantially since the beginning of the year, although South Africa remains one of the countries most interested in the cryptocurrency.

Bitcoin Interest over time

Pitfalls

Bitcoin has encountered large obstacles during its meteoric rise, which had dramatic effects on its value. Other cryptocurrencies were also similarly affected.

In the middle of 2017, Ethereum threatened to overtake Bitcoin as the world’s largest cryptocurrency – due to fears that Bitcoin would not recover from its Bitcoin Cash hard fork.

Regulation has also provided investors with concerns, with major countries attempting to crack down and control the use of cryptocurrency.

This is also true for ICOs, many of which found themselves in trouble with the SEC and other regulatory bodies.

All of these hazards caused the price of Bitcoin to fluctuate dramatically as it rose throughout the past year, allowing investors to profit from the large price swings (if they timed their orders correctly).

With many people losing interest in Bitcoin, however, it remains to be seen whether it will recover to previous highs.

High mainstream interest could once again be gained if the currency begins another meteoric rise, but it may also remain the domain of blockchain enthusiasts and long-term holders if it fails to rally.

Now read: Bitcoin “fades”

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Bitcoin’s roller coaster ride in South Africa