What is Bitcoin?
Bitcoin is the world’s first digital currency and it is expanding in popularity worldwide. With FX trading and the Meta Trader 4 platform you can trade this rapidly growing currency against the US Dollar 24/7. Many traders prefer to trade Bitcoin derivatives due to this asset’s highly volatile nature, which makes it ideal for CFD trading online.
South African Bitcoin traders have seen their portfolios rising and falling spectacularly, owing to the volatile nature of this contrarian financial instrument. Bitcoin is ideal for trading purposes, given its volatility, liquidity, and global appeal. Traders can buy and sell Bitcoin CFDs on top-tier platforms such as FX trading, and MT4 (MetaTrader 4). Bitcoin is priced against the USD, making it easily accessible to South African traders and traders around the world. The BTC/USD pair is quickly rising through the ranks as the most sought-after cryptocurrency pair.
Choose AvaTrade for Bitcoin Trading in South Africa
AvaTrade is licensed and regulated across multiple jurisdictions. As the premier South African Bitcoin CFD broker, you can trust us with your digital currency trades.
- Bitcoin trading never sleeps –
the crypto markets run around the clock. Unlike equities markets which run during business hours, Monday through Friday, Bitcoin is available 24/7 in SA.
- Limited risk on Bitcoin trading –
AvaTrade clients in SA can pre-set ‘Profit & Loss’ levels by way of stop losses and take profit limits. That way, you’re always one step ahead of volatile pricing. To get started, establish a budget for speculative purposes, set the price for taking profits, and implement your trading strategy.
- Safety and security of trades –
AvaTrade South Africa enjoys full licensing and regulation across 6 regulatory jurisdictions. Clients have the added protection of segregated accounts to protect against bankruptcy or claims against the company.
- Boosted leverage for Bitcoin trading –
In South Africa, you can boost the power of your Bitcoin trading budget by a multiple of 20:1. Make your rands go a whole lot further with Bitcoin trading at AvaTrade.
- Plenty of digital currency options to choose –
The world’s premier cryptocurrency trading platforms support multiple digital currency options.
- Crypto/Fiat currency trading options –
You have carte blanche to pick Crypto/Crypto currency pairs (ETH, BTC, BTG, XRP, XLM), or Crypto/Fiat currency pairs (ZAR, USD, GBP, EUR). It’s your call trader!
- Low-cost and no hidden fees –
A win-win for South African cryptocurrency traders. At AvaTrade SA, there are no bank fees and no commissions on transactions.
The 4-Step Guide to Trading Bitcoin at AvaTrade
- Register a trading account at AvaTrade ZA
- Add funds to your account
- Input the amount of your investment
- Buy BTC or Sell BTC
AvaTrade ZA offers the lowest cryptocurrency spreads online. With South Africa’s leading online broker, you can benefit from favourable cryptocurrency trading conditions. Go Long or Go Short on BTC and profit accordingly.
Bitcoin’s Rise to Prominence
Around 2008, Satoshi Nakamoto founded the first ever cryptocurrency, Bitcoin. At the time, a paper explaining its mechanics and the ideology behind it, was published through the Cryptography Mailing List. The first Bitcoin software client was released in 2009, and Nakamoto collaborated with many other developers on the open-source team, never revealing his identity. By 2011, the enigmatic Bitcoin founder had disappeared. His peers then, understood how valuable this cryptocurrency was and worked feverishly to develop it to its maximum potential.
With so many real-world applications, Bitcoin’s popularity quickly soared. It now enjoys universal appeal. Of course, the identity of its elusive founder was never revealed. Nakamoto collaborated with many developers over the years, but he disappeared from the scene in 2011. Work on Bitcoin and related cryptocurrencies continued in earnest. By October 2009, the world’s first Bitcoin exchange was established, and by November of that year 4 million Bitcoins had been ‘mined’. At the time, $1 was the equivalent of 1,309 Bitcoin – a fraction of a penny. Considering how widely Bitcoin fluctuates, that was a real steal: it hit the $10,000 mark within eight years.
And so, the rise of the Bitcoin begun…
The year 2021 proved to be a blockbuster year for the primary cryptocurrency, Bitcoin. Bitcoin’s price sharply rallied to above $55,000 in February 2021, and headlines hit the wires that Tesla had bought $1.5 billion worth of the digital coin. There was a brief market correction, but the Bitcoin trend continued upward, and it again jumped above $60,000 ahead of the public listing of Coinbase, the biggest crypto exchange in the US. However, negative regulatory news and a far-reaching electricity blackout in China saw Bitcoin overextend a pullback to just above $30,000 by July 2021. There was a regulatory crackdown in the UK and China, but there would soon be positive news.
In June 2021, El Salvador announced that BTC would be considered legal tender within the country, and there would be no capital gains tax levied on crypto exchanges there. Furthermore, a blockchain-related job advert by Amazon saw investors speculate that the retail giant was looking to start supporting crypto payments. Together with the Taproot upgrade on the Bitcoin blockchain, these factors provided massive headwinds that saw the coin rally to its all-time high at around $70,000 in November 2021. A correction followed, but Bitcoin continued to spiral downwards in 2022. By late January 2022, Bitcoin had tumbled to below $35,000. A brief recovery saw the coin trade above $45,000 in early May 2022, but it has since fallen just below $30,000 as of May 2022. This comes as a result of China, which has continued its regulatory crackdown on cryptocurrencies and the fall of TerraUSD (a stablecoin backed by LUNA), which has impacted investors’ confidence.
How did Bitcoin Beat Other Cryptocurrencies to Remain #1?
Bitcoin was the world’s first cryptocurrency. It is also the most respected cryptocurrency. ‘When Bitcoin sneezes, the entire market catches a cold. When Bitcoin rallies, it pulls the entire market up with it.’ The greater the volatility with BTC trading, the bigger the profit potential. SA traders can derive maximum yield when volatility and liquidity are greatest. It’s for this reason that BTC is enjoying surging levels of trading activity.
Bitcoin is the ‘Rock Star’ of the crypto-world. Whenever a Bitcoin-related story breaks, the media jumps all over it. That’s when speculators make a run on Bitcoin – either selling short or going long. These fluctuations drive traders towards Bitcoin CFD trading. Besides for trading, Bitcoin now enjoys greater global acceptance at e-Commerce sites, gaming sites, and for the purposes of money transfers. Bitcoin’s popularity is a testament to its increasing acceptance among a growing number of people.
Despite Bitcoin having no association with governments and central banks, Bitcoin is generally trusted as a legitimate trading instrument. Miners use powerful computers to mine these e-coins. By 2040 the last of 21 million Bitcoins will have been mined. At that point, no further BTC will be available. Since Bitcoin is a finite commodity [the quantity is governed by an algorithm], there will never be any more than 21 million Bitcoins in circulation. Limited supply and increasing demand always results in higher prices – whether it’s Bitcoin, natural gas, crude oil, or gold.
That’s one of many reasons why South African traders are flocking to trade Bitcoin CFDs!
Bitcoin in the News
- November 2012 – WordPress started accepting bitcoins
- July 2013 – Launching of a joint project in Kenya, linking bitcoin with M-Pesa, a popular East African mobile payments system.
- September 2014 – TeraExchange, LLC, received approval from the U.S. Commodity Futures Trading Commission to begin listing an over-the-counter swap product based on the price of a bitcoin, marking the first time a U.S. regulatory agency approved a bitcoin financial product.
- March 2016 – The Cabinet of Japan recognised virtual currencies like bitcoin as having a function similar to real money.
- August 1, 2017 – First fork in Bitcoin was created: Bitcoin Cash
- October 24, 2017 – The second fork in Bitcoin was created: Bitcoin Gold
- December 10, 2017 – Cboe Futures Exchange (CFE) starts offering Bitcoin futures trading
- December 28, 2017 – Third fork in Bitcoin created: New coin on SegWit2x chain called B2X
- February 19th, 2021 – Bitcoin market cap tops $1 trillion
- June 9th, 2021 – El Salvador becomes the first country to adopt Bitcoin as legal tender
- October 19th, 2021 – The first futures-based Bitcoin ETF is launched in the US
- November 2021 – The Taproot upgrade is implemented on the Bitcoin blockchain, the first significant upgrade since 2017
- February 2nd, 2022 – Bitcoin price crashes after Russia launches attacks on Ukraine
- April 27th, 2022 – Central African Republic (CAR) adopts Bitcoin as legal tender
How To Profit from Bitcoin Trading When the Market Goes Down
Bitcoin is a highly volatile asset, with changing sentiment capable of driving prices from one extreme to another. The market can experience overzealous optimism one moment and then quickly change to dark pessimism. At the end of the day, though, investors have to file their taxes whether prices are rising or falling.
Luckily for investors, Bitcoin is subject to capital gains tax. This presents a unique opportunity for claiming tax deductibles when prices are plunging. If you suffer a loss from your Bitcoin investment, you are entitled to include the details so as to reduce your overall tax liability. For a Bitcoin loss to be ‘valid’, it has to be realised. This means that you have to liquidate your position. You can only suffer a loss when you sell Bitcoin at a lower price than you bought it. If prices fall, but you do not sell, that is an unrealised loss and does not qualify for a tax deduction.
For instance, if you bought 1btc at $40,000, but the price is now $35,000, and you sell it, you will have realised a loss of $5,000. If you file your returns, you can claim a capital loss worth $5,000. In the US, capital losses can be claimed up to a maximum of $3,000. But the good thing is that excess loss can be rolled over to subsequent years indefinitely. So, if in 2020 you suffered a loss of $5,000, you are entitled to tax-deductible of up to $3,000, and you can carry forward the additional loss of $2,000 to 2021.
Bitcoin and other cryptocurrencies are inherently volatile. The good days are cherished, but the bad days need not be stressful. By using this tax-harvesting trick, you will be able to reduce your tax liability when Bitcoin prices fall.
Need Help Trading Bitcoin?
AvaTrade South Africa offers you the opportunity to Buy (go long) or Sell (go short) on all Bitcoin trades. This service is available to you 24/7. You can use your preferred trading strategies to buy or sell Bitcoin regardless of which way the currency is moving. We encourage you to learn more about Bitcoin trading by visiting our Trading Conditions & Charges page.
Please note: The cryptocurrencies market’s high volatility offers endless trading opportunities.
Bitcoin trading FAQ
- Is the Bitcoin market subject to manipulation by a handful of investors who control the majority of Bitcoin?
If a financial asset is majority-owned by a handful of investors, their collective actions could theoretically shape demand, supply, and pricing. When the ‘Bitcoin Whales’ decide to hold their stores of Bitcoin, they effectively remove their share from circulation, and from trading activity. This reduces the amount of Bitcoin being bought and sold, which in turn affects pricing. When supply exceeds demand, prices go down, and when demand exceeds supply, prices go up. Long-term investors comprise 56% of Bitcoin holdings, 18% of Bitcoin has been lost, traders make up 15% of holdings, and 11% of Bitcoin remains to be mined.
- Why can you trade Bitcoin 7 days a week but you can’t trade forex 7 days a week?
Bitcoin is the world’s premier cryptocurrency, but it still is a relative newcomer to the scene. Unlike forex, Bitcoin has yet to gain mass adoption. Like forex, Bitcoin is also decentralised. It’s worth pointing out that Bitcoin is not directly controlled by governments or central banks. And, trading is not subject to regular business hours since Bitcoin is a P2P cryptocurrency, and BTC exchanges run around-the-clock. Forex markets run 24 hours a day, 5 days a week for retail traders, but not for institutional traders. Forex trading takes place from 5PM EST Sunday to 5PM EST Friday for retail traders.
- What made Bitcoin’s price rise above $50,000 in 2021?
On Tuesday, February 16, 2021, the price of Bitcoin surged above $50,000. Many cryptocurrency analysts attribute the sharp rise in the price of Bitcoin, and altcoin, to increasing interest from institutional investors. In Q1 2021, major companies like MasterCard, PayPal, and Tesla indicated strong support for cryptocurrencies. In hindsight, the 2017 rally which pushed Bitcoin’s price to $20,000 was driven by speculative retail sentiment, while the 2021 rally was driven by institutional demand. Previously, retail demand for Bitcoin was fuelled by leveraged trades, making the market inherently volatile. Regardless, it remains a speculative asset with questionable intrinsic value.
Due to price fluctuation, certain crypto pairs may be suspended and/or removed from our trading platforms periodically.
When trading with AvaTrade ZA you are trading on the price changes of the digital coin, and not physically purchasing it.