The price of Bitcoin has risen substantially over the past few months, continuing the volatile but inexorable surge it has been experiencing over the last year.
Endorsements of the cryptocurrency by influential figures such as Elon Musk, as well as increased investments in the digital token by major companies, have helped to drive up the price of Bitcoin.
While Bitcoin is a volatile investment and occasionally used as an element of major scams to entice potential victims, it has continued to improve its position as a mainstream speculative investment, judging by its price growth.
It has also become more popular among institutional investors, with family offices and other entities considering diversifying their portfolios by buying Bitcoin.
Big returns from Bitcoin
Those who bought Bitcoin last year would have made a tidy profit if they held on to their investments until now.
As of 1 March 2021, the price of Bitcoin in South African rand was R712,734, dropping slightly after reaching a high of over R840,000 in February 2021.
If you had purchased Bitcoin on 1 January 2020 – when it was priced at R110,598 – you would have increased your investment by 544% if you sold on 1 March 2021.
This is a significant return on investment, and it is apparent from these major returns why Bitcoin has become a popular investment for retail traders, albeit a risky one.
If you had purchased Bitcoin earlier than in 2019, you would have made even more significant returns.
The table below shows what the balance of your investment would be if you had purchased one bitcoin on 1 March 2014.
|1 March 2014||R7,400|
|1 March 2015||R3,280|
|1 March 2016||R7,360|
|1 March 2017||R17,670|
|1 March 2018||R126,701|
|1 March 2019||R54,068|
|1 March 2020||R141,064|
|1 March 2021||R712,734|
Institutional investors in South Africa are considering diversifying their portfolios to include digital assets like Bitcoin, according to cryptocurrency expert Simon Dingle.
Dingle is the author of In Math We Trust and the founder of cryptocurrency startup Venox, a private digital asset custody and execution company focused on the South African market.
He said that many of the calls he has been taking have been from local family offices and other investors, who are contemplating their potential returns if they placed just 1-2% of their portfolio in digital assets like Bitcoin.
Dingle said that Bitcoin still has significant room for growth, and noted that as soon as major institutional investors climb into cryptocurrency, others will follow.
“Once the regulatory certainty is there, then the herd mentality and social validation will kick in,” he said. “It will take one big fund to move and then the others will start to follow.”
He added that Bitcoin’s previous growth spikes may pale in comparison to the exponential growth in value that would result from institutional investment.
Bitcoin price graph – 1 January 2020 to 1 March 2021
The graph below shows the rise in the price of Bitcoin in US dollars over the past year.