Investors in virtual currency bitcoin are counting their gains as its valuation surges, standing at around $62,000 (Sh9.1 million) as of last Friday, levels last seen in November 2021 when it hit an all-time high of $64,158 (Sh9.4 in current exchange rates).
According to price-tracking platform CoinMarketCap, the valuation has been on a consistent rise since January 26 this year when it stood at $39,936 (Sh5.9 million), meaning it has gained by Sh3.2 million in just slightly over a month.
At the start of March last year, the bitcoin was valued at $22,354 (Sh3.3 million), translating into an almost three-fold gain year-on-year, or valuation addition of up to Sh5.8 million in 12 months.
In recent years, the digital coin exchanged at the lowest rate in November 2022 at $16,602 (Sh2.4 million), levels last seen in November 2020.
Pundits have attributed the latest spike to a move by the United States securities regulator earlier in the year to approve the first-ever bitcoin exchange-traded funds (ETFs), which paved the way for the opening of a regulated trading platform.
“The reason why we are seeing the spike is because now there’s better regulatory clarity on the trade following the move by the US to approve ETFs in January. In the past six to eight months, there has been a serious crackdown on dodgy behaviours and this has worked to restore investor confidence,” observes Michael Kimani, founder and chairman of the Blockchain Association of Kenya (BAK).
“Financial institutions are also slowly creating products that are mainstreaming crypto thus giving the trade the much-needed legitimacy,” he adds projecting that the valuation of the bitcoin could soon hit the $100,000 (Sh14.7 million) mark.
An ETF refers to a listed investment product, which tracks the performance of a particular index or basket of shares, bonds, money market instruments or a single commodity, according to a definition by the Nairobi Securities Exchange (NSE).
What the approval of the bitcoin ETFs, which are now listed on two of the world’s largest bourses—the New York Stock Exchange and Nasdaq— meant, is that investors would be allowed to invest in popular crypto without having to buy it or directly own it, thus avoiding the risks normally associated with buying the digital coins.
Following the approval in January, analysts termed the move a game-changer for crypto investors forecasting that there would be a rise in demand for bitcoin, which would, in turn, occasion a bull market for the digital asset.
“With more money getting into bitcoin through the ETFs, it means the demand will go up, which, hopefully, will see bitcoin’s price go up. That is the expectation,” said David Gitonga, founder of blockchain consultancy Kanga Labs at the time.
“This impact will trickle down to anyone who holds Bitcoin, whether in Kenya or the US. Everyone who currently has a portfolio in Bitcoin is celebrating because the price has risen, and it could rise further.”
Indeed, within hours of the US Securities and Exchange Commission announcing the approval of the ETFs, bitcoin’s price shot from $44,000 (Sh6.4 million) to over $48,000 (Sh7.03 million) while the market capitalisation grew by more than eight percent.
In Kenya, about 6.1 million people own different kinds of cryptocurrencies, although the value held by the investors is not known.
According to Singaporean crypto research firm TrippleA, most locals hold Bitcoin since it is the most popular crypto asset globally.
Regionally, about 12 million people have invested in crypto, which again is dominated by bitcoin, even as it emerges that a majority of African holders are speculators who use digital coins as inflation hedge and for wealth creation.
In Kenya, the government is working on new regulations to police trading operations in the sector amid rising fears that increased transactions in virtual assets could increase risks of money laundering and terrorism financing.
A technical working group set up to advice the Treasury on cryptocurrency is currently preparing the draft regulations to be forwarded to the Cabinet for adoption, marking one of the key interventions in addressing weaknesses in its financial system.
