Sale of MTI Bitcoins in South Africa Briefly Wipes out Premium Buyers – Finance Bitcoin News

Bitcoin.com

The premium or arbitrage gap on bitcoin in South Africa recently turned negative following the offloading of coins worth over $75 million by liquidators of MTI. As a result of the temporary supply glut, buying bitcoins on local South African exchanges briefly became cheaper than buying on overseas exchanges.

The Impact of the MTI Liquidators’ BTC Sales

However, following the conclusion of the liquidators’ sale nearly two weeks ago, the arbitrage gap has now turned positive. As one South African media report notes, the premium of BTC has now recovered and was hovering between 4.8% and 6.5% on April 20.

How To Get Free Crypto  

Meanwhile, the same report also quotes, Jon Ovadia, the CEO of a crypto start-up Ovex, explaining why BTC is usually sold at a premium in South Africa. He said:

What we have seen is that crypto arbitrage gaps appear in those countries that have foreign exchange controls, such as South Africa. This of course impacts the demand for hard currency assets, such as bitcoin.

The CEO also discusses the principal factors that determine the size or the extent of fluctuations in the arbitrage gap. For instance, Ovadia states that when the bitcoin price in US dollars falls, “the arbitrage gap tends to rise as there is a lag in the South African rand price of bitcoin.” The other key factors influencing the size of the gap include the massive money printing by central banks as well as the BTC’s bull run.

Bitcoin Premium and Exchange Controls

In the meantime, Ovadia’s assertion that BTC is largely sold at a premium in countries that have stringent exchange controls appears to be validated by the top crypto’s price range in certain countries.

For instance, Bitcoin.com News reported in February 2021 that the premium on BTC surged to more than 40% in Nigeria after the country’s central bank imposed restrictions on crypto trading. Nigeria, just like many of its peers across the African continent, has faced shortages in foreign exchange since the start of Covid-19 lockdowns. Consequently, the country has since introduced tough regulations that seek to conserve this scarce resource.

Coinbase Banner  

Similarly, Bitcoin.com News reported in early April that BTC was trading at a premium of 18% in South Korea. Just like South Africa, the Asian economic powerhouse has stringent exchange controls in place and this might explain the huge premium on BTC.

What else do you think causes BTC to trade at a premium? Tell us what you think in the comments section below.

Tags in this story

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Read disclaimer

Go to Source
Author: Terence Zimwara


Recommended Crypto Services, Products and Strategies:

The first thing any crypto investor needs is is a reliable and secure Crypto Wallet.  Whether you’re looking for an online wallet, hardware wallet, desktop or mobile wallet, Crypto Renegade provides you with all the Best Crypto Wallets in each category.

FreeBitcoin Banner  

Best Crypto Wallets Banner

When you’re ready to buy more crypto, or exchange your coins for others, Crypto Renegade’s list of the Best Crypto Exchanges has you covered.  The Crypto Exchanges recommended here offer everything from simplicity and convenience to advanced trading platforms and profit sharing. 

Best Crypto Exchanges Banner

If you want to learn more about the methods and tools that can be used to find Great Crypto Projects, then be sure to check out Crypto Renegade’s strategy for How To Find The Best Cryptocurrency.

Crypto Strategy Banner

For those people that don’t have any money to invest right now, or just want to understand the technology a bit more, you’ll definitely want to check out Crypto Renegade’s Free Crypto Strategy and start collecting Free Coins today!

Free Crypto Banner

What do you think about cryptocurrency? Do you have any questions about it? Be sure to leave a comment below.

This site uses Akismet to reduce spam. Learn how your comment data is processed.