Bitcoin has done better than most financial assets in 2020 and is on the path to becoming one of the best financial bets for the year. Its price recovered after plunging in March, amid the COVID-19 induced sell-offs. It has since gained about 30% so far.
However, one little known digital coin has almost doubled in price since the beginning of the year, and it still shows more upside in its present momentum.
Tezos, trading under a sticker XTZ, has gained about 91% since the start of 2020. Tezos was trading at $2.56 at the time of writing this report, with a market capitalization of almost $1.817 billion, according to data obtained from CoinMarketCap.
At the start of 2020, Tezos was the 15th most valuable crypto asset by market value according to the data. It has since managed to climb into the top ten most valuable cryptocurrencies and could surge past its crypto rivals with its current momentum.
Tezos, which was designed as a “self-amending cryptographic ledger” and uses the so-called verification model, has emerged a big fan of tokenized real-estate and security tokens.
“Tezos seems to be one of the most popular platforms for new projects to build on at the moment,” said Mati Greenspan, the founder of market analysis firm Quantum Economics told Forbes in a recent interview
“Several projects that I’m currently advising are using it. As well, the tokenomics are structured in a way that a lot of the incoming supply is diverted to staking and taken off the market,” said Mati Greenspan, the founder of market analysis firm Quantum Economics.
In addition, after Bitcoin’s recent halving has made it harder to mine Bitcoin, many have suggested that miners (people who produce Bitcoin after a difficult task is completed) might as well switch their computing strength to other cryptos —potentially giving Tezos a boost.
Bitcoin is giving better returns than the Nigerian stock market
Bitcoin has attracted hedge and quant traders who make money on short-term price swings.
With the COVID-19 pandemic still raging on and upsetting markets, Bitcoin has outperformed the Nigerian stock market and even most global equities; only performing worse than gold. Investors attribute Bitcoin’s performance to bets/bids that have been made to hedge against inflation.
In 2020, Bitcoin has only posted a loss of around 5%, compared to respective drops of 17.5% and 18% for the Nigerian and MSCI All-Country World Index. With a market capitalization of over $126 billion as at April 22, 2020, it is much bigger and more liquid than the Nigerian stock market (market capitalization less than $31 billion dollars —N11.793 trillion est. April 21, 2020).
Like stocks and other riskier assets, Bitcoin climbed up in the wake of massive stimulus packages launched by fiscal authorities and central banks around the world last month to ease the economic damage caused by the COVID-19 outbreak.
In addition, with a supply pegged at 21 million, its rarity gives it an intrinsic value and protects it from global central banks’ moves or policies that encourage inflation.
However, in 2020, bitcoin performed poorly against popular safe havens like gold. Just last month alone, Bitcoin slumped more than 35%, showing that gold has proven far more resilient than Bitcoin
Bitcoin which is notorious for high price swings, has found its use as a means of digital payment and scared off institutional investors such as pension funds. It has however attracted hedge and quant traders, who make money on short-term price swings.
As its volatility soared, major cryptocurrency exchanges saw huge movements in volume last month. Many speculators sold off the cryptocurrency (like other assets) to raise money.
“I’m long gold, I’m long bitcoin – we are seeing a monetization of debt like we have never seen in our lifetimes,” Novogratz said in a Monday interview with Bloomberg TV. “To me in the long run, that has to make hard assets look better.”
Bears extend reign to crypto market, drops by about 50%
Bitcoin made further drastic losses sinking below $6,000 for the first time since May 2019 due to a coronavirus scare.
Bitcoin once tagged as a ‘safe haven’ asset, has recently proved bookmakers wrong again. On March 12, Bitcoin made further drastic losses, sinking from $10,000 to below $6,000 for the first time since May 2019 due to coronavirus scare.
At its current price of $5,500 on Friday, 03.05 pm Nigerian time, bitcoin seemed attractive to buy. However, investors’ bias was broken with heightened uncertainty in the global economic outlook.
For these reasons, we can expect that the current bounce towards $6,000 might be a temporary relief on the way down.
However, the sudden drop comes after months of stable price growth, which saw Bitcoin rose from below $6,000 at the start of the year to above $10,000 by late February.
[READ MORE: Cryptocurrency: Discern investors’ goldmine)
Chief Executive Officer, BitMEX, an exchange registered in Seychelles, Arthur Hayes thinks that the likely bottom for Bitcoin lies at around $6,000. As the flagship token suffered from the spread of the coronavirus, altcoins took a more severe hit with heavy losses seen across the board.
The latest crash appears to dispel this narrative, as it coincided with the sharpest rise in coronavirus-related deaths since the outbreak began.
Bitcoin bearish party seems to be utterly unstoppable. The selling pressure has been unrelenting on Thursday and could last throughout the day’s trading sessions. Data by CoinMarketCap shows that the market cap lost over $17 billion from the $223 billion recorded on Wednesday to $335 billion at the time of writing.
The reported trading volume is, however, on the rise, from $136 billion to $144 billion in the same period. Intriguingly, Bitcoin dominance has increased from 64% to 65.6%, to show that altcoins led by Ethereum have taken a huge plunge.
On Twitter, CEO, Invest Diva, Kiana Danial, explained that the current development witnessed in the industry went contrary to the general belief of the market. According to him, the market is usually insulated from global threats like coronavirus.
He said, “What happened have left many disappointed, as the digital currency has not been acting as the ‘safe haven’ it promised to be”.
The dramatic loss in value mirrored the drop in stocks as well as crude oil, with the main markets reacting to further bad news about the coronavirus epidemic. In addition, global uncertainty suggests investors’ desire to close positions in risky assets such as cryptocurrency.
Denis Vinokourov, Head of Research for London-based digital asset firm, Bequant, stated on Forbes Magazine that the crypto market had declined “sharply” in the last 24 hours, with bitcoin falling more than 20% in an environment characterized with worries about coronavirus.
Another factor is the U.S. President Donald Trump’s latest travel restrictions and panic-driven selling witnessed in the market. He noted that the desire of investors to sell off their holdings triggered “a liquidity crunch as the cost of capital spiked up across crypto exchanges.”
In addition, President Trump, on March 11, banned travel for most of Europe to the United States and the equities markets reacted with further lows. These drastic measures might have resulted in steep losses that leave the traders in the cryptocurrencies markets clueless of what will happen next.
Furthermore, from a short term view, the impact of the global economy is very indecisive but bitcoin is currently trading like a risk on the asset. Despite having a negative correlation earlier, the cryptocurrency market may continue to fall in tandem with the global equities market and other leading assets apart from Gold.
However, we still believe in the long term fundamentals of bitcoin as an asset. At the moment, not many large financial institutions are investing in bitcoin or crypto assets, However, when there is regulatory and settlement risk, this will change. Once that happens, bitcoin will be on a par or overtake gold as the safe-haven asset.
Blockchain technology expected to tackle Africa’s challenges across industries
Blockchain technology is slowly but surely moving beyond secure, seamless, transparent, trusted and convenient transactions.
Blockchain technology is slowly but surely moving beyond secure, seamless, transparent, trusted and convenient transactions as new use cases of the transformative innovation emerge.
From finance, education, and governance institutions to enterprises in the energy, healthcare, and insurance space, companies are looking to experiment with the distributed ledger technology known as blockchain.
According to Paul Mitchell, Fintech & Blockchain Lead for PwC South Africa, “The speed at which blockchain technology is being adopted is unprecedented. There is a growing recognition that this technology has profound implications in many areas, and we are watching it move from a startup idea to an established technology in a fraction of the time it took for the Internet to be accepted as a standard tool.”
Experiments dating back a few years have been conducted and many more are expected to be launched. For example, back in mid-2015, South African bank, ABSA launched an Africa-wide blockchain supply chain challenge through their Rise open innovation platform and was said to have over ten blockchain-based experiments and research initiatives that were being piloted within the bank. In 2016, the bank also joined the R3 consortium.
Just a couple of years ago, the South African Reserve Bank (SARB) launched the report on Project Khokha, a proof of concept designed to simulate a ‘real-world’ trial of DLT-based wholesale payment system.
The project focused on providing participants practical experience on aspects of using DLT in a realistic test environment where different deployment models were utilised. The results showed that the typical daily volume of the South African payments system could be processed in less than two hours with full confidentiality of transactions and settlement finality.
More recently, the Centre for Affordable Housing Finance in Africa (CAHF), research consultancy 71point4 and Seso Global also announced that their partnership meant to create South Africa’s first blockchain-based property register.
The pilot study area is expected to consist of almost 1,000 government subsidised properties located in four sites in Makhaza, Khayelitsha that have not been registered on the deeds registry properties. Cape Town blockchain-based startup Registree also struck a partnership with the University of Cape Town to create blockchain-based records for students.
Registree is utilising a combination of traditional databases and the Ethereum blockchain; the blockchain-based student registry is supposed to address several problems of youth unemployment rate and skills shortage.
It was also recently reported that the Eastern and Southern African Trade and Development Bank (TDB) had closed the first live end-to-end trade finance transaction using blockchain technology in a US$22mn sugar transaction deal.
“With this transaction, there’s potential to transform how we finance cross-border trade at the bank,” said Michael Awori, Chief Operating Officer at TDB.
“We have plans to carry out US$10bn-worth of African trade transactions with the Asia Pacific region, including Japan, by June 2020,” said Samir Neji, CEO of dltledgers, an inter-enterprise blockchain company which was involved in the deal.
Local companies such as the digital asset exchange platform iCE3X are also bringing new innovations to the space. Recently, they launched the Instamyna Bitcoin Lightning Game as they see the gaming industry as one of the main drivers of cryptocurrency adoption in Africa. Crypto is ideal for online gaming as it has the main benefit of instant value transfer. Whilst the uptake is slow during the maturing stages of the industry, I can certainly see huge potential for digitised assets and markets.
I remember years ago how farms of gamers created digital fortunes by selling accounts for games like Diablo on eBay. I can see digitised assets trading for crypto online in the near future. Environments like Second Life are a great concept, but without real-world monetization at scale, it is a difficult sell.
Crypto changes this,” said Gareth Grobler, Founder & CEO of iCE3X exchange. The company has also added features to their exchange that enable people with no crypto trading experience to learn how to trade for free. People can learn to trade by practising on the demo trading pair: the bull/bear market.
Another international company with an interest in the local gaming arena and planning to launch it’s South African based initiative in the first quarter of 2020 is crypto online gaming and cryptocurrency payments provider Paybetr, according to Alakanani Itireleng, who is a representative of the company and the CEO of Satoshicentre based in Botswana.
Global companies looking to establish a footprint in Africa
Many companies across the globe are taking a huge interest in the potential Africa has to offer in terms of market growth for blockchain-based products. æternity blockchain, for example, a scalable blockchain platform that enables high-speed transacting, purely-functional smart contracts is “supporting the adoption of blockchain technology, which has the potential to disrupt the current centralised linearly structured systems that typically create bottlenecks and thus a perception of scarcity,” according Apollo Eric, the Africa lead for æternity Hub Africa – a Kenyan based software company developing decentralized applications on æternity’s open-source blockchain platform.
“Africa will hugely benefit from a decentralised planning of economic and governance systems, and in doing so, grow the continent out of poverty,” he added.
Paxful, the peer-to-peer platform, is another major player making real impact in people’s lives by enabling ecosystem participants to increase their income-generating potential to achieve financial independence while getting educated about new digital technologies. The company now services more than 3 million digital currency wallets with major market uptake across South Africa, Nigeria, and Ghana.