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This transcript is a translation from the authentic interview which aired on 18 January, performed in Afrikaans and aired on RSG Geldsake, right here.
RYK VAN NIEKERK: Marius Reitz from Luno joins us now as a result of it’s Wednesday, and on Wednesdays we chat about the crypto business. Marius, welcome to the programme. Last year was not a good year for cryptocurrencies. Bitcoin fell round 63%, Ethereum was nearly 70% down. It was the second-worst year for crypto costs ever.
But 2023 began off on a good footing. Bitcoin is already up 23% [year to date], Ethereum 30% and the costs have gone up on daily basis over the previous two weeks. This constructive run is the longest in a decade, so it’s a pretty massive turnaround. Is this a development or simply volatility?
MARIUS REITZ: Ryk, it sounds rather more constructive. As you mentioned, crypto traders definitely have one thing to smile about after a very troublesome year final year. As you talked about, Bitcoin and Ethereum, the two largest cryptocurrencies, are respectively up 23% and [30%]. I believe traders are giving a sigh of reduction after the troublesome year. Speculators I believe profit once more from a rise in buying and selling volumes that are additionally 114% up in comparison with final week. Daily quantity traded was round US$10 million.
Bitcoin led the cost. Altcoins – referring to all cryptocurrencies aside from Bitcoin – fared higher. The motive was that when Bitcoin exhibits momentum, the expectation amongst speculators is that the lesser-known altcoins would possibly carry out higher, so there we noticed a rise as nicely.
I believe at a extra technical stage it’s all the time troublesome to place one’s finger on value actions. First, there appears to be what is named a ‘short squeeze’ just lately in the market – principally quick sellers who assume costs will fall are compelled to purchase again in the market, which pushes up the value.
Secondly, inflation numbers in the US, I don’t assume it was the place to begin, however the market awoke a bit extra at the finish of final week.
But, as ordinary, I believe it’s nearly inconceivable to invest on what the value will do quick time period. It is perhaps short-lived. I believe the market expects the value to probably stabilise and transfer extra sideways.
RYK VAN NIEKERK: I discover the sudden help for Bitcoin in explicit attention-grabbing. While we chatted often in [2022] our dialog was typically about Ethereum and Cardano and plenty of different, let’s say, up-and-coming cryptocurrencies, and Bitcoin was seen as nearly a dinosaur in the business. But it’s fairly evident that there’s a better deal with Bitcoin now than there was final year. Has there been a change in sentiment in the business, with Bitcoin once more being thought of the business [standard]?
MARIUS REITZ: We must make a distinction, Ryk. I believe there are numerous tasks which are very attention-grabbing, many new cryptocurrencies equivalent to Ethereum, Solana and Polygon – many tasks exhibiting nice future potential. These tasks are nevertheless not the retailer of worth that Bitcoin is. I believe over the previous couple of years and in the scenario we discover ourself as we speak, if I have a look at the cracks which have appeared in world monetary programs, political environments and social programs, there may be an rising demand for a type of cash, a scarce digital asset that is freed from central management to hedge towards political interference, and so forth. I don’t assume that is mainstream, however there may be a explicit group of people that need one thing like this.
I take into account this largely the motive we nonetheless see excessive demand for Bitcoin. But the reality of the matter is this isn’t the solely motive traders have an interest in it. And I believe if we have a look at a few of the different tasks, it has extra to do with innovation and a manner we are able to do transactions higher, cheaper and sooner in future. There is a distinction between the two, and I believe the motive is that Bitcoin is seen as extra of a type of ‘sound money’. So there may be a totally different sort of name for it.
RYK VAN NIEKERK: I all the time discover it attention-grabbing to talk about volumes, as a result of they present that the provide is on the enhance, after which there may be after all demand for it. So excessive volumes imply that there’s rather more commerce occurring. You indicated earlier on that there had certainly been excessive volumes, however are you able to see that your purchasers are abruptly beginning to purchase or to take earnings if the value abruptly rises so quickly?
MARIUS REITZ: I believe a value enhance is the set off after a rise in the demand, after which there should even be a rise in provide. There are a couple of causes. First, many traders burnt their fingers in the earlier bull run in 2021/early 2022, they usually see that as a uncommon alternative to take extra money off the desk.
In the previous couple of days we’ve got additionally seen barely much less of a stream to stablecoins. Then it’s additionally the ordinary case of long-term traders considering that cryptocurrency and Bitcoin in explicit have a future in a future monetary system, which they then see as a shopping for alternative.
So I believe these dynamics are all the time taking part in out between speculators, long-term traders and institutional traders. I believe what we’ll additionally see this year is that there have been many institutional traders leaving the market in 2022, who diminished their publicity to cryptocurrency on their stability sheets. And I believe with a little extra stability this year, the place all the crypto crises and the platforms that have been in the headlines final year, stabilise and extra regulation in the market, we must always see demand from massive establishments as nicely.
RYK VAN NIEKERK: Marius, thanks in your time tonight. That was Marius Reitz from Luno.