Why cryptocurrency is a better offshore investment than fiat currencies
According to a recent article by wealth manager Karlin Pather, one of the top five public companies has a market capitalization greater than the entirety of the combined value of South African companies listed on the JSE. The ZAR / USD rate is a simple shadow from what it was 10 years ago. JPMorgan has predicted growth reduced by 3% for South Africa following the recent riots. Citibank has cut your exposure SA bonds and currencies. And inflation keep on skyrocketing.
The rand is in trouble. And this combination of factors makes the equation simple: Holding the ZAR in favor of a foreign currency is currently a foolish option, even for the most casual investors. Offshore investments are the way to go.
The emergence of stablecoins – cryptocurrencies pegged to the value of an underlying asset such as fiat currency or precious metal – has completely changed the rules of the game for cryptocurrencies.
Tether (symbol USDT) was the first stablecoin to emerge in 2014, pegged to the value of the US dollar. The company behind it keeps the price of Tether equal to the US dollar by maintaining one dollar of assets for every unit of Tether it distributes.
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But the real wonders of cryptocurrency did not come to light until after the boom in decentralized finance (DeFi) in the summer of 2020. DeFi, which enables cryptocurrency exchanges to offer financial services such as loans and paid accounts without involving an intermediary, has brought a plethora of services to the world’s cryptocurrency that only traditional financial institutions could offer before.
One of the main advantages of cryptocurrency over fiat currencies is that transactions take place quickly. Crypto asset is more liquid than fiat currency and holding something like Tether means that an investor can essentially hold USD but transact at cryptocurrency speed.
OVEX, a prime brokerage and crypto-currency exchange with a valuation of $ 122 million, has implemented several sophisticated features that allow it to provide consistent returns to its clients. OVEX manages both unstable coins such as Bitcoin, Ether and Binance Coin, as well as stable coins – Tether, TrueUSD (backed by the US dollar) and Binance USD (also backed by the US dollar).
For anyone wishing to put their ZAR into a USD backed stablecoin, OVEX offers a high interest account that can bring gains of up to 20% annualized interest. By buying a stablecoin directly instead of USD, investors can also use OVEX cryptocurrency-specific arbitrage gains, which have sometimes gone up to 15% per transaction. OVEX manages to achieve these gains by using a Unique method of buying cryptocurrency on its UK-based stock exchange, then instantly sell it on its South African stock exchange, thus capitalizing on the price difference. South African exchanges generally lag behind in cryptocurrency prices compared to foreign exchanges.
Learn more about the OVEX Arbitration service here.
For high volume traders and institutional clients, OVEX offers a concierge service at the counter with extremely low spreads.
As an offshore investment, cryptocurrency backed by USD is far superior to holding USD alone. Buying USD or EUR and “waiting” for the ZAR to improve precludes the additional option of generating risk-free cryptocurrency income during the current storm. By purchasing US dollar-backed stablecoins, an investor can make consistent gains from DeFi services while hedging against the falling rand.