Hectic, bru: Locals pour rands into trading cryptocurrencies
Despite the steep selloff in December and January, speculative traders are piling in to bitcoin and ethereum
JSE-listed Purple Group has added cryptocurrencies to its online trading platform, allowing users to buy bitcoin and ethereum in rands or to bet against the performance of these flagship digital currencies.
Despite the steep cryptocurrency selloff in December and January, which curbed the euphoria of many speculative buyers, financial institutions in South Africa and other markets are considering these broking services in response to client demands.Purple’s GT247.com platform decided to offer bitcoin and ethereum broking services from March after receiving “strong demand” from clients, said Barry Dumas, trading specialist at the group.“We are seeing a lot more engagement from international institutions like banks and exchanges looking to regulate cryptocurrencies, as I suspect they want it to be a legitimate asset class in the future,” Dumas said.
In addition to allowing short selling – a mechanism that lets investors benefit from falling prices – Dumas said GT247.com was a platform for clients to trade bitcoin and ethereum directly in rands. “Your rands aren’t converted into dollars like some offerings out there, which can expose you to exchange risks.”
While cryptocurrency trading volumes had declined significantly over the past 12 months – owing to the global drive towards regulation, exchanges being hacked, and other reasons – “we have seen a decent amount of interest” from mostly retail clients since the service was launched.
And most clients were banking on higher prices as buying interest outstripped short positions, he said. “We are seeing a decent spread between the bulls and bears but the bitcoin bias in the market is still to be long.”Dumas said there were indications that the cryptocurrency market was starting to stabilise as clients became accustomed to it and as regulators took action. “We still see some volatility but it’s not at the levels we saw last year.”
South Africans can also buy cryptocurrencies on local exchanges including Naspers-backed Luno and Ice3x, or can get exposure to digital currencies via the local desks of international brokerage houses such as Saxo Bank.
FNB Foreign Exchange CEO Anthony Grant told Business Day in March more of the bank’s customers were asking about cryptocurrency trading options.
While FNB had been “carefully assessing the opportunities”, it would only pursue “sustainable solutions” and the bank had not yet made a decision about facilitating cryptocurrency trades, Grant said.