Bitcoin Remains Steady While South African Rand Depreciates

The world economy is still reeling from the economic turmoil in China, where markets remain in disarray and investors are liquidating assets at an alarming rate. As a result of this panic, other currencies are also being affected, as it is all about finding markets with liquid assets. The South African Rand has certainly been hit by this, depreciating quite a bit against the US dollar. Bitcoin, on the other hand, is making steady progress.

China's economic turmoil causes rand depreciation

Like almost all fiat currencies in the world, the value of the South African Rand is closely tied to the U.S. dollar. Given that the U.S. dollar is the primary trading currency relative to other currencies, this is one market where traders can always find some type of liquid asset.

When it comes to trading liquidity, none of this will be provided by the Chinese market anytime soon. With stock markets shut down twice last week and the yuan likely to depreciate further, it will be very difficult to sell these assets at a reasonable price. Investors and traders are forced to liquidate some of their assets to cover these losses.

Before investing in the South African rand, investors were active in a trading system that exposed another fatal weakness in the financial sector: the South African rand could depreciate by 10% in an instant. But this was not because the rand was a weak currency, but because a group of investors decided to liquidate their US dollar assets.

In fact, Japanese investors appear to be largely responsible for this trend, as they exchange their rands for dollars and then for yen. Regardless of who is responsible, it is not a good sign for the South African economy in any way, as a 10% devaluation overnight would push it to the brink of extreme danger.

What is expected from this price drop is that the yen will appreciate significantly and the dollar will lose momentum, but considering that the dollar is on the right path to reach parity with the euro, the impact on the dollar will not be as serious as it could be.

Bitcoin Remains Stable While Global Fiat Currencies Struggle

Few would be surprised to hear that the plight of all the world’s fiat currencies has had little impact on Bitcoin these days. Despite a minor downtrend this morning as shown on the chart, the popular digital currency is holding steady around $440.

Slowly, investors are beginning to see the true value of Bitcoin, rather than viewing it from a purely speculative perspective. Until recently, Bitcoin has proven to be more stable than any currency in existence, and this trend will continue for the foreseeable future.