As the cryptocurrency market continues to evolve, Daniel Kibel, Co-Founder of CMTrading, discusses its potential performance in years to come.
“The cryptocurrency market has experienced huge rallies recently. And while there's not a lot you can count on in online trading, cryptocurrency being volatile is one thing that has been pretty constant over the last two years. Bitcoin (BTC) has experienced its biggest rally in the past few months, as the ‘premium’ cryptocurrency breached the psychological milestone of hitting the $50,000 level in August. Just shy of three months later (at the time of writing), Bitcoin is now sitting at over 66 000. Similarly, rival cryptos like Ethereum and Ripple have also seen huge price increases to around $4,700 and $1.25 respectively.
“It’s worth mentioning that the crypto market, especially Bitcoin, saw record highs and disastrous lows earlier in 2021. Despite its tumultuous performance, though, there remains a tremendous amount of wealth to made with the total crypto market valued at more than $2 trillion.
Trading crypto in South Africa
“South Africa has seen a rapid increase in the number of crypto assets traded locally. In June 2021, the South African treasury revealed that there are at least two million local retail investors in crypto, amounting to $2 billion in transaction volumes.
Given crypto’s history of volatility, the current increase doesn’t guarantee a long-term reversal. As a spike in prices ripples through the crypto market, many traders are asking – ‘Is now a good time to invest in crypto?’
What’s driving the recent crypto rally?
“Bitcoin, and in fact the entire crypto market, has proven to be an asset that’s prone to huge price movements based on rumours and events. PayPal recently announced it would allow customers in Britain to use Bitcoin and other cryptocurrencies. This provides more legitimacy for the entire crypto market and ultimately begins a chain reaction of buying, driving up the price of all digital coins.
Is Bitcoin worth investing in? What does it take to make a profit?
“Bitcoin is like any asset. If you buy it and it goes up, you make a profit, and if it drops you lose money. The issue is the huge price movements seen in Bitcoin – often thousands of dollars. If the low is about $47,000 and the upside high is $68,000, that's a really big move for the majority of traders. It does, however, mean you need a lot of capital. That said, we’ve seen daily movements from $5000 to even $10,000. This makes crypto a huge risk, though there are many people making money.
“Sadly, a lot of people are still losing large sums of money, because even though they've correctly judged the price direction, they lose out due to funding. For instance, if you were to buy Bitcoin earlier in August, you would’ve bought it at $48,000 and it went up to a high of around $68,000. That’s good news, right? But if it falls all the way back down to $47,000 (which is not impossible), that’s an obvious loss. There are always big moves in the crypto market and it's something that people need to be aware of.
Just how risky is crypto trading?
“Personally, I much prefer trading currencies or indices because they're more stable. They don't move in the huge amounts that crypto does. But it's super high risk and sees extremely high returns. Due to the size of a single Bitcoin, with the value of it currently nearing $67,000, you need a lot of money just to be able to hold a position in the crypto market.“
Will we see widespread adoption of crypto?
“I believe it's already happening. The future is without any question crypto. What remains to be seen is whether it’s through Bitcoin or some other crypto asset. I don't think there's any question that crypto is the future. “We’re seeing the adoption of crypto by some of the largest financial companies in the world. It's clear that when one starts, people believe in a snowball effect; if one starts then, every other company will start accepting crypto.
Anything to note when trading crypto
“Be very careful and come to terms with the huge volatility in the market. You must be patient and understand that you might not have enough money to hold a position if the trend goes against you. It's a good market and traders are making a lot of money. You need to have enough capital so that even when the market goes against you, you can still hold your position.”
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CMTrading is the brand name of Global Capital Markets Trading Ltd (A Seychelles company, company no. 104785)