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Can Bitcoin Overtake The Interest Of Forex Trading In South Africa?
South Africa is the forex trading big cheese in Africa. It boasts 190 000 forex traders with a massive daily trading turnover of $2.21 billion. While forex trading is well established in the country, Bitcoin is now becoming in-thing. Does this mean Bitcoin is becoming more popular than forex in South Africa? Let’s find out.
Bitcoin Interest in South Africa
As mentioned, Bitcoin trading is giving forex trading a run for its money. While the reason for Bitcoin appeal varies from one investor to another, here are the top reasons why Bitcoin has encroached on forex space and caught the attention of traders' eyes.
Crypto Boom
Bitcoin opened the year trading at $10000 before experiencing a price surge to reach an all-time high of $62000. Investors who held Bitcoin assets doubled their wealth six folds in just three months. As a result, many of the traders in South Africa saw an opportunity in crypto trading and embraced it. In fact, some of the MT4 brokers in South Africa started offering crypto trading services.
Opening A Bitcoin Wallet And Accessing The Market Is A Cakewalk
As mentioned, South Africa leads in forex trading in Africa. However, the government has enacted solid laws to regulate the forex market due to illegal online trading activities. This means opening a forex trading account especially, involving a bank account, is quite a hassle. You have to complete an array of paperwork, provide identity as part of the KYC framework, and meet the stringent banking conditions.
On the other hand, opening a Bitcoin wallet is a breeze. You only need an email address and phone number for verification. The flexibility and ease of access give Bitcoin an upper hand over the forex.
But that's not all. Forex trading requires funding the account with a specific minimum capital. On the other hand, you can trade Bitcoin through peer-to-peer platforms. In essence, P2P trading does not restrict you to the amount of Bitcoin you can trade, unlike forex which is determined by the amount in your trading account. Peer-to-peer trading is yet another factor that is giving Bitcoin an edge over forex trading.
Bitcoin is not only easily accessible; it is cheap and fast to transact. With Bitcoin, you can send and receive Bitcoin from individuals or organizations from any part of the globe without having to go through a bureaucratic process of filling a heap of paperwork. In addition, you do not have to change the currency from Rand to US dollar or any international currency. Therefore, you avoid paying expensive charges. Despite the fact that Bitcoin is currently in a dip, it is projected to increase by roughly 20% in the next year.
Forex trading, on the other hand, involves quite some bureaucracy, especially with cross-border money transfers. The faster, cheaper, and seamless Bitcoin transactions give Bitcoin trading an upper hand over forex trading.
High Financial Literacy and technology-savvy population
South Africa ranks top 20 in countries with the highest Bitcoin searches worldwide. Compared to Forex, Bitcoin has had more searches while forex searches have remained flat over the past year. While Forex searches hover around the 20 search interest popularity score, the popularity of Bitcoin was as high as 90 in May.
This means many people are interested in understanding and venturing into Bitcoin investment. In addition, a huge portion of the population is technologically savvy and financially literate. According to TripleA, at least 7.11% of the population own Bitcoin. With the country facing massive unemployment, the youths have resorted to investing in Bitcoin.
Trading 24 Hours seven days a week
While forex trading is restricted to five days a week, Bitcoin trading happens round the clock, including the weekend. The fact that the investors can buy and sell Bitcoin anytime, including holidays and weekends, makes the crypto more endearing to the traders. In fact, Bitcoin experiences astronomical volatility on weekends after the close of the forex markets, which provides an excellent opportunity for traders to make great profits.
A New Dawn of Crypto regulations
South Africa is the first country in the region to enact a solid regulatory framework guiding Bitcoin and crypto trading. The regulations will be guided by a position paper released by the Intergovernmental Fintech Working Group (IFWG). The country's apex bank currently has Anti-Money Laundering (AML), Know Your Customer (KYC), and tax regulations, all of which prohibit using Bitcoin for illegal activities. As a result, this has boosted the confidence of the traders in their bid to trade cryptocurrencies. The country is yet to pass bills that affect Bitcoin And crypto trading negatively, such as a ban.
Will Bitcoin Eventually Overtake Forex?
On the question of whether forex trading can overtake Bitcoin, only time will tell. All indications point to a growing crypto market. Remember, Bitcoin is in the early stages of adoption. Some experts project the value of the virtual currency will grow as more people adopt cryptocurrencies. This means that the industry has massive potential, and the early adopters could reap big if the value of the cryptocurrency actually grows.
Remember, Bitcoin is the largest cryptocurrency by market capitalization. While we can expect the cycle of ups and downs, it is unlikely its price will hit rock bottom any time soon. In simpler words, you can expect the price of Bitcoin to continue an uptrend, perhaps north of $100000 as per experts’ prediction. This means in the long run, hodlers are likely to profit from Bitcoin.
This is not the case with forex. The predictability of the forex market direction hangs in the balance. Some people will lose, others will gain. As a result, more traders are leaning towards crypto to benefit from the piece of the pie while it lasts.
Final Words
There is a chance that Bitcoin could overtake forex in South Africa, albeit little. Both markets are here to stay, perhaps with different degrees of growth. It is more likely the markets will grow towards each other and become complementary. In this case, Bitcoin trading will be a haven for traders when the forex market is erratic and vice versa. The two markets will enable traders to diversify their portfolios. In a nutshell, Bitcoin and cryptocurrency will not be a competition of interest but pretty much intertwined markets that work hand in hand.
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