Luno optimistic amid crypto volatility

Bitcoin has experienced a remarkable surge, with a 180% increase compared to three years ago and an 88% rise since the start of 2023. On 16 April, Bitcoin reached its peak price of 2023, hitting R574,000 ($30 330), and it is currently trading at R544 000 ($27 000) on Luno, a leading global cryptocurrency investment app. However, the past year has been anything but smooth sailing for the crypto market, even by its own volatile standards.

According to Christo de Wit, the country manager for Luno in South Africa, “The aggressive gains from [altcoins and meme coins] are often short-lived and they border on the riskier side of the spectrum.” He emphasised the importance of focusing on Bitcoin and Ethereum, which have drawn the bulk of the interest in the market.

In South Africa, crypto assets have been classified as financial products, requiring crypto asset providers to apply for financial service provider licenses starting from 1 June 2023. De Wit expressed Luno’s support for this regulation, stating, “Luno supports regulation as it will drive high standards in the industry, particularly in relation to consumer protection.”

The adoption of comprehensive crypto regulations, known as MiCA (Markets in Crypto Assets), by European lawmakers was hailed by De Wit as a landmark moment for the crypto industry.

Looking ahead, De Wit mentioned the upcoming Bitcoin halving, stating, “Historically we have seen that Bitcoin starts to perform in the run-up to an event which takes place every four years – the halving.”

The halving reduces mining rewards for new Bitcoin by 50% with the aim of reducing the overall supply. De Wit highlighted the halving as a core factor impacting Bitcoin’s price and investment case as a store of value with limited supply.

De Wit addressed the skepticism surrounding Bitcoin during price falls, stating, “Luno’s view is that the technology that drives cryptocurrencies is one of the most important financial innovations of our time and even a lower price does not reflect the long-term value that cryptocurrencies will bring.”

A positive outlook for Bitcoin’s price was also mentioned, with De Wit referring to Standard Chartered’s recent prediction, “Standard Chartered recently predicted that the price of Bitcoin would reach over USD 100 000 by the end of 2024.”

Luno has observed consistently higher trading volumes in South Africa, indicating that the crypto market remains active even during market contractions. De Wit noted, “On Luno we are seeing consistently higher trading volumes in South Africa, which give us the confidence that the crypto market is still very active – even when markets contract.”

Regarding customer activity, De Wit revealed, “In terms of customer activity, we can see that more than 250 000 customers in South Africa engage with the Luno app weekly. This means that people are keeping a close eye on market movements – checking in and staying informed.”

De Wit acknowledged the influence of risk appetite on market movements and mentioned how economic turmoil prompts investors to shift from risk assets into safer options. He stated, “When traders are unsure about crypto prices, they flee to stablecoins and bank deposits. When they are unsure about stablecoins and bank deposits, it’s crypto’s time to shine.”

Luno, as a trusted guide to the world of crypto, carefully curates the coins offered on its platform, providing only eleven coins that meet stringent legal, risk, and security standards. De Wit emphasised the importance of trust and value, stating, “As awareness and exposure to crypto grows worldwide, and after a market shakeout like the one experienced in 2022, the market will likely retain the coins and crypto companies that are trusted and add value.”

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