For South Africa-based cryptocurrency exchanges, 2021 has been a successful year, with several milestones and records achieved.
Among the major highlights of 2021, the exchanges indicate that this year, cryptos have grown into a multi-trillion dollar asset as institutional investors increasingly embrace digital currencies.
This year, Bitcoin – the world’s most popular cryptocurrency – hit an all-time high of $ 68,521 on November 5.
As of this writing, Bitcoin is trading at just over $ 51,000.
Exchanges see cryptocurrencies continue to gain momentum in 2022, although they are calling for regulation of the sector for digital assets to become mainstream.
Speaking to ITWeb, Richard de Sousa, CEO of AltCoinTrader, said, âIn 2021, for the first time, we saw large institutions go into crypto and actually buy crypto with institutional funds. We’ve never seen this on the scale we’ve seen this year.
Additionally, he says, countries like El Salvador have adopted cryptocurrency as legal tender this year – one of the biggest turning points in cryptocurrency adoption.
âWe’ve also seen big players like PayPal embrace cryptocurrency and allow millions of users to buy cryptocurrency directly through the PayPal app. We’ve also seen Visa, Mastercard, and major institutional banking players take a friendly approach, almost realizing that if they didn’t get involved in the alternative financial system, they would miss out and their businesses would disappear if they didn’t. did not. Don’t get on board, âhe said.
Brett Hope Robertson, senior investment analyst at Crypto Exchange Revix, notes that 2021 has been another year for the crypto record books, with the sector’s total market capitalization having jumped nearly 300% in the past 12 months.
According to Hope Robertson, Bitcoin has risen a pretty impressive 179% over the past year, but that pales in comparison to the rampage of altcoins like Solana, Ethereum, and Cardano.
The rise of smart contracts was another highlight of the emergence of cryptocurrencies during the year, he says.
Smart contracts are contracts written in computer code that are self-executing and require no human intervention – for example, the ability to borrow money at around 5% per year using cryptocurrencies as collateral, he explains.
âWhile Ethereum is known as the largest and most trusted smart contract cryptocurrency, it was Solana that stole the show, with returns above 10,000%. This is impressive compared to Ethereum (595%) and Polkadot (430%), ânotes Hope Robertson.
Richard de Sousa, CEO of AltCoinTrader.
Speaking of the institutional interest in cryptos, he points out that in November, Bitcoin’s most famous backer, Microstrategy’s Michael Saylor, announced that his company had purchased an additional 7,002 BTC, bringing its total holdings to 121,044. BTC (worth $ 6 billion).
âSome of the world’s largest fund managers have started to take an interest in cryptocurrencies, including the world’s largest investment house, Blackrock, as well as Morgan Stanley Investment Management and over a dozen other managers. of funds.
âIn October, the SEC [Securities Exchange Control] approved the ProShares Bitcoin Strategy ETF, one of several Bitcoin ETFs backed by futures contracts now approved or under consideration.
Hope Robertson points to the rise of gaming-centric and metaverse-focused cryptos as the other milestone. âOne area of ââcrypto that is quickly catching the attention of Facebook and several institutions is that of the metaverse and gaming-centric coins. These cryptocurrencies have given their investors amazing returns, with cryptos like Axie Infinity (21,000%), Decentraland (3,900%) and The Sandbox (11,900%).
According to Farzam Ehsani, co-founder and CEO of VALR: â2021 saw cryptocurrencies grow into a trillion dollar asset class at the start of the year and grow to nearly $ 3 trillion last month.
âWe have seen the tremendous rise of decentralized finance and non-fungible tokens (NFTs), showing the enormous possibilities offered by crypto. We have also seen an increase in institutional interest from some of the biggest investors of our time (Paul Tudor Jones, Stanley Druckenmiller and many others) in banks and businesses entering the space in size.
However, Ehsani says the skeptics have remained, with people like Warren Buffet and Charlie Munger representing the gap that remains in the world when it comes to this asset class.
“And of course, given that divide, the volatility of Bitcoin and cryptocurrency has remained extremely high.”
Brett Hope Robertson, Senior Investment Analyst at Revix.
On how South Africans use crypto, De Sousa says the biggest trend in the South African market has been the ability to own passive income by holding cryptocurrency.
âWe have seen exchanges deploy staking and earning platforms. Cryptocurrency has gone from a static asset to a dynamic asset that rewards you for holding cryptocurrency. This is, I believe, the biggest trend we have seen in the South African market.
âGlobally, we’ve also seen NFTs come out and we’ve seen a lot of blockchain use cases as well.â
Looking ahead to 2022, De Sousa believes cryptocurrencies will challenge normal bullish and bearish cycles due to the fact that there has been so much adoption by the general public, not just from the investor. retail but also the institutional investor.
“This will allow the crypto to have a lot of power to continue to perform well as we see adoption increasing day by day. So I expect a very bullish and very positive year for 2022.”
Farzam Ehsani, co-founder and CEO of VALR.
For Hope Robertson, in South Africa, many clients want access to cryptocurrencies to protect themselves from the devaluation of their currency and the systemic risk that a third world country can have on their financial stability.
He says a lot of people see cryptocurrencies as a rand hedge because the assets are denominated in U.S. dollars.
Of the 2022 outlook, Hope Robertson says, âThis is to be guessed at – normally at this point in the crypto cycle we would expect a sell-off in January and a bear market to come, but the new institutional need for exposure to crypto, coupled with the fact that the halving cycle has less and less of an effect on Bitcoin has made a difference.
He clarifies that this is due to the fact that fewer coins are issued to miners every four years, and therefore the inflationary pressure on this asset becomes negligent over time.
âWith those two factors, we could see Bitcoin and cryptocurrencies in general decouple from their four-year cycle and move into a traditional 10-year asset cycle.
âWe need the crypto world and regulators to work together to find common ground where both can exist. This will allow institutions to enter a new asset class in a safe and regulated manner. Once we have the right regulations, adoption by the general public will be almost a given. “
Marius Reitz, CEO Africa of Luno.
Marius Reitz, managing director for Africa at Luno, says digital assets and crypto companies have shown massive growth and significant market capitalization gains, indicating the maturity of the sector.
He notes that Coinbase debuted in 2021 as the largest list of digital assets in history, entering the market at twice the valuation of the Nasdaq.
âIt has been positive for the industry, increasing trust and transparency. Having a public company of this size shows that companies related to crypto – and the crypto asset class – need to be taken seriously.
In South Africa, he says, buying crypto as an asset still appears to be the most prevalent use case. âOn Luno, the number of monthly active customers buying or selling crypto has doubled from last year.
âWe are seeing clients hold their crypto for 10 months on average, compared to an average of just three months in 2017. Perhaps this is an indication that we are in the early stages of moving away from pure speculation to some clients. longer term. value.
“While we are still in the active phase, we are seeing slow but continuous growth with crypto increasingly used for payments.”
Reitz expects price volatility to continue into 2022. âAt the same time, greater awareness of crypto and adoption by payment providers will bring the use case closer to payments. With increasing attention to crypto as an asset class, stablecoins are likely to be more widely adopted. ”