Bitcoin bubble alert

The price of Bitcoin in SA has gone ballistic over the past month.  On the Luno exchange, the price has risen by 155% (from R17,425 to R44,650).  It is up over 500% in just one year.  I have friends asking me questions about owning Bitcoin and it seems like everyone is interested in getting a piece of the action.  That is not good news.

“Be fearful when others are greedy, and greedy when others are fearful”  Warren Buffett

It is clearly time to be fearful, if you own any Bitcoin.  Apparently the SA price has dislocated from the international price due to high demand.  In fact, there is good money to be made buying Bitcoin in Europe, selling in SA and then repeating the process.  The price gap moves every second but at times can be as much as 12% out of alignment depending on which exchanges you are working with.

Of course the Bitcoin price can go much higher (and probably will) but once the music stops, the drop is going to be a big one.  Investors (the newest ones that will buy at the highest prices) are going to get taken out and will never touch Bitcoin again.  Those that believe in the long-term prospects for Bitcoin might be celebrating but for how long?

I don’t know enough about Bitcoin to ever have invested, so am I missing something?

Paul Maughan


  1. You mentioned this in our Maf lecture today at UCT. I really enjoyed your energy and the way you integrated real life cases to the work we learning. It is awesome to see all these real life problems (opportunities) that we as CA’s can solve in order to make a difference in the world. So thank you. I look forward to reading more of your blogs and I hope (know) it will make me a better CA one day! 🙂

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