Cryptocurrencies are once again on the rise. This time, it is being driven by high-net-worth individuals, family offices, and fund managers.
Early in November, Bitcoin reached 1 million Rands, marking yet another milestone in a long march of milestones.
When bitcoin surpassed 300,000 Rands at the end of 2017, it was dubbed a "bubble" waiting for a pin. In 2018, bitcoin fell by 84 percent before resuming its ascent to 1 million Rands.
Bitcoin came within a whisker of 1 million Rands in April of this year before plummeting by more than 50%.
According to Jon Ovadia, CEO of crypto company Ovex, the recent bitcoin rally differs from previous rallies in that a large portion of the buying is coming from high-net-worth individuals (HNWIs), family offices, and wealth managers.
"We started seeing this trend on a smaller scale about a year ago, but it really picked up steam this year," Ovadia says.
"Traditional investors exposed to the stock market have seen the kind of outsized returns that are being made in cryptos, and they are putting pressure on their wealth managers to give them some exposure to cryptos, even if it is only 2% or 5% of their total investible wealth."
So far this year, Bitcoin is up more than 300 percent, and Ethereum is up 1000 percent. Other cryptocurrencies, such as Cardano and Solana, are up 1,827 percent and 16,000 percent, respectively.
"During previous bull markets, these massive returns could have been dismissed as speculative bubbles that were simply unsustainable." We've been through years of so-called speculative bubbles, and cryptos are still on the rise. "It's become clear that you can no longer ignore the massive wealth creation that is occurring in cryptos," Ovadia says.
Ovex is well-known as a market leader in crypto arbitrage, which allows investors to profit from price differences in cryptocurrency between overseas exchanges and Ovex.
The majority of its revenue comes from an over-the-counter (OTC) trading platform for large crypto trades. "We have access to deep liquidity, so clients who want to buy one, ten, or one hundred bitcoins can do so through our OTC desk at very low rates," Ovadia adds.
Wealth managers are interested in owning bitcoin and earning passive income through 'staking' (putting cryptocurrencies to work on the blockchain in exchange for rewards) or arbitraging cryptocurrencies.
"Two years ago, wealth managers saw cryptocurrency as something strange and exotic on the outskirts of the investment world."
"A year or two ago, responsible wealth managers were keeping a close
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