Cryptocurrency has dominated the news cycle for all the wrong reasons over the past several weeks thanks to the much-heralded collapse of the FTX crypto exchange on 11 November. Its founder, Sam Bankman-Fried, lost $16 billion virtually overnight as he filed for bankruptcy protection amidst an onslaught of withdrawals. This is according to some of the findings of media monitoring company Novus Group’s newly released Cryptocurrency Analysis report.
The reporting period (1 October to 11 November) began positively enough with many publications focusing on the usability of cryptocurrency given how South African consumers have begun showing signs of a growing familiarity with crypto. Also contributing to this coverage was the announcement by the Financial Sector Conduct Authority (FSCA) that crypto assets would be treated as financial products in the country, thereby ensuring regulators can better monitor the market while safeguarding consumers.
Other notable pieces included business magnate Elon Musk sharing news about his perfume line, ‘Burnt Hair’, which is available for purchase through cryptocurrency as one of the payment platforms. In addition, Mastercard introduced Crypto Source, a new programme to enable financial institutions to bring secure crypto trading capabilities and services to their customers. According to Mastercard, the 2022 Mastercard New Payments Index indicated that 29% of global respondents hold cryptocurrency as an investment, with another 65% indicating a preference for crypto-related services to be provided by their current financial institution.
Prior to the disastrous news on 11 November, Visa and FTX announced their collaboration to launch cryptocurrency debit cards in over 40 countries, including the US and select Latin American, European, and Asian countries. FTX Cards would be linked to FTX cryptocurrency accounts and will allow consumers to pay for goods and services at merchants that accept Visa cards. Closer to home, retail giant Pick ‘n Pay added cryptocurrency as a payment option for consumers at a select number of its stores. The new payment system was tested at approximately ten stores in the past five months and is now available in 39 stores across the country.
However, all of this disappeared in the periphery when cryptocurrency markets tumbled on 11 November on the FTX news. This resulted in bitcoin falling to two-year lows, down almost 4% at one stage. FTX had been struggling to raise funds to avoid a collapse after traders rushed to withdraw $6 billion from the platform in about 72 hours on the account of rising interest rates.
After the surge of withdrawals, Bankman-Fried reached out to rival, Binance, for an emergency rescue proposal. Unfortunately, this fell through as concerns were raised over the financial health of FTX. The media reported that the situation prompted the US Securities and Exchange Commission to investigate FTX’s handling of customer funds amid the liquidity crunch, as well as its crypto-lending activities.
“What is of specific interest is despite the recent concerns around FTX, cryptocurrency news coverage in South Africa spiked on 1 November thanks to the announcement of capital gains tax regulations on cryptocurrency. Of course, it is still early days to see the repercussions of the FTX disaster, but several local industry experts have indicated that this could spell a fresh bout of hesitance from consumers to invest in crypto,” says Joe Hamman, founder and director of Novus Group.
Certainly, cryptocurrency coverage focused on products and services (49%) with financial performance (15%) and legal and compliance issues (10%) rounding out the top three topics of interest. As to be expected, the top publications in the reporting period were predominantly financial and technology media with Investing, Anambra, and CNBC Africa featuring the most coverage on crypto.
Fill in your details below to download the Novus Group Cryptocurrency Analysis Report covering the 1 October to 11 November 2022 period.