Bitcoin hits R1 million

The value of bitcoin passed the R1 million milestone on South African cryptocurrency exchanges Luno, Valr, and AltCoinTrader in the early hours of Monday morning.

It comes as the price of bitcoin surged overnight from under $62,000 to over $66,000 on dollar-denominated exchanges.

Bitcoin’s price hit all-time highs in October following the launch of the first exchange-traded fund (ETF) based on futures of the cryptocurrency.

Trading under the ticker BITO, the ProShares Bitcoin Strategy ETF launched on the New York Stock Exchange on 19 October 2021.

Bloomberg reported that more than 24 million BITO shares changed hands on launch day, representing a turnover of almost $1 billion (around R14.4 billion on the day).

According to Bloomberg, bitcoin climbed to its all-time high thanks to a rush of pandemic-era liquidity, speculative bets, and expectations of broader adoption by institutional investors.

It was a rough ride.

After leaping to new highs in April, bitcoin plunged below $30,000 in June—dipping close to R400,000 in South Africa—after Elon Musk posted on Twitter about the energy consumption of Bitcoin’s mining algorithm.

Bitcoin mining is the process of solving complex mathematical problems that helps secure transactions on the blockchain.

Musk had given bullish endorsements for Bitcoin and posted several in-jokes on Twitter involving alternative cryptocurrency Dogecoin.

His endorsements of Bitcoin included an investment by Tesla of $1.5 billion (R21.7 billion) in the world’s biggest cryptocurrency.

Musk had also announced that Tesla would accept bitcoin as payment for its electric vehicles.

However, the billionaire backtracked, stating that Tesla would not be accepting bitcoin payments citing “concerns about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal”.

Cryptocurrency enthusiasts found Musk’s sudden U-turn curious, as he must have known about the amount of computing power currently devoted to the Bitcoin network.

Regardless, Musk’s tweets kickstarted a rapid correction in the manic cryptocurrency market, ultimately wiping out over $1.25 trillion (R18 trillion) of value.

Prices have recovered since July, despite regulatory crackdowns around the world and the banning of Bitcoin mining in China.

Before the ban, China was the biggest contributor of computing power to the Bitcoin network.

Wall Street enthusiasm has also increased.

Bank of New York Mellon, Goldman Sachs, and Morgan Stanley are among firms offering crypto-related services.

Dawn Fitzpatrick, chief investment officer of Soros Fund Management, said her firm holds some coins and that crypto “has gone mainstream.”

At the same time, there is still a long way to go.

For instance, SkyBridge Capital founder Anthony Scaramucci said that while there’s a “feeding frenzy” in crypto among about 10% of financial-services firms, the vast majority are hesitant about the asset class.

Over the past few years, a whole new crypto-economy has also formed.

Non-fungible tokens or NFTs — which allow holders of digital art and collectables to track ownership — have stepped into the limelight.

So has the decentralized finance (DeFi) ecosystem, which allows people to lend, borrow, trade and take out insurance directly from each other, without intermediaries such as banks.

Bitcoin’s record came in time for its birthday — the digital coin was born on Halloween 2008 with the publication of a research paper by someone who went by the name Satoshi Nakamoto.

The paper was titled “Bitcoin: A Peer-to-Peer Electronic Cash System.”

Its birth ignited a digital currency revolution that led to the emergence of more than 12,000 other coins, according to CoinMarketCap data.

The total market value of cryptocurrencies exceeds $2.5 trillion (R36.1 trillion).

Now read: Why the world’s biggest Bitcoin exchange banned South Africa from margin trading

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Bitcoin hits R1 million