Bitcoin, the world’s first decentralised crypto currency topped $50 000 (about R745 000) this week, a more than 3-month high, it continued to rebound from a sell-off in June and July. Photo: REUTERS/Benoit Tessier/Illustration
Bitcoin, the world’s first decentralised crypto currency topped $50 000 (about R745 000) this week, a more than 3-month high, it continued to rebound from a sell-off in June and July. Photo: REUTERS/Benoit Tessier/Illustration

Bitcoin rallies on improved market sentiment

By Edward West Time of article published Aug 29, 2021

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BITCOIN, the world’s first decentralised crypto currency topped $50 000 (about R745 000) this week, a more than 3-month high, it continued to rebound from a sell-off in June and July.

The digital currency slipped slightly as the week progressed and was trading at $47 490 per Bitcoin, on Wednesday afternoon. It hit an all-time high over $64 000, in April, but sold-off heavily in June and July, dipping below $30 000 with some bears at the time predicting it could go as low as $20 000.

Renewed and tougher regulatory scrutiny from Chinese authorities that have forced bitcoin mining operations to shut down, fuelled the decline.

China had been home to more than half the world’s Bitcoin miners, but in May, the Chinese government called for a severe crackdown on Bitcoin mining and trading.

According to the Coindesk website, Bitcoin’s hash rate - the computing power used for mining - dropped by over 50 percent in July from May, when China cracked down on mining, but had since begun to recover as miners set up mining facilities in other parts of the world.

But Bitcoin has been on a steady rise since mid-July.

Luno Africa GM Marius Reitz said with the latest push to $50 000 for bitcoin, this week, market sentiment had climbed higher and “we are now back in the ‘Extreme Greed’ area on the Fear and Greed Index. The fear is gone for now, and the market is optimistic.” Luno is the biggest cryptocurrency platform in Africa.

Reitz said that, as always in crypto, it was very difficult to pinpoint the exact reasons for a Bitcoin price increase, but it appeared, that the crypto market had now fully factored in the crackdown on miners in China and moved on from this.

Among the positive developments for cryptocurrency was the announcement, last week, by Walmart, America’s largest retailer by sales, that it was on the lookout for a cryptocurrency product lead who would help identify customer trends in the space.

Reitz said the role included driving Walmart’s digital currency strategy and identifying crypto-related partnerships and investments.

While Bitcoin has become a trillion-dollar industry, it’s market capitalization, at around $2.16 trillion, is still only about 10 percent of the gold in circulation.

In November 2015, about 92 percent of Bitcoin trading was done with the Chinese fiat currency Renminbi, according to data from CryptoCompare, a cryptocurrency data company. Since then, China’s increased scrutiny on cryptocurrency has taken a toll on the local market, though Chinese traders remain a significant force in the Bitcoin trade, said Reitz. “Many believe that the scrutiny created a grey market as Chinese exchanges moved offshore.”

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