Weathering the storm: A calm approach to volatility

Produced in partnership with Binance

The opening months of 2025 have ushered in a fresh bout of financial turbulence. A swirl of global economic headwinds and local currency instability have made volatility the new normal. For South African investors, consumers and finance professionals, this unpredictability can be disquieting. Yet, it need not provoke panic. Rather, it invites a strategic response, grounded in understanding and perspective.

Volatility, after all, is nothing new. Markets have always been shaped by economic cycles, political upheaval and shifting sentiment. What has changed is the velocity at which information flows, and the degree to which global and local economies are now entwined.

For South Africa, the ripple effects of soaring US interest rates, decelerating global growth and stubborn geopolitical tensions meet domestic hurdles such as load-shedding, inflation and anaemic GDP expansion. The confluence of these factors has intensified market gyrations across virtually every asset class.

One striking global development has been the dramatic resurgence of US-led protectionism, with the US imposing among the most aggressive tariffs since the 1930s.

A 10% blanket levy and duties of up to 54% on Chinese imports have heightened fears of a full-blown trade war. The tremors are being felt worldwide, not least in the cryptocurrency sector. Bitcoin, often viewed as a bellwether for digital asset sentiment, dropped by 6.7% in April in direct response to these macroeconomic forces.

For South Africa, the global turbulence compounds long-standing structural weaknesses. The rand slid markedly in early April, and the JSE experienced a notable contraction.

Global stagflation risks are growing, driven by protectionist policies and persistent inflationary pressures abroad. The resultant climate has been one of heightened local market volatility, testing the resilience of investors and policymakers alike.

Navigating stormy waters

Volatility can feel like a red flag, but it is often simply part of the natural rhythm of markets. What matters most is how one responds.

Despite the intense focus on cryptocurrency’s swings, traditional sectors are equally subject to instability. Equity, bond and commodity markets are navigating the same stormy waters. Such periods often prompt deeper financial introspection. Investors revisit their goals, reconsider their risk appetites and, crucially, reassess their timelines.

Some are turning towards alternative assets, notably cryptocurrencies, seeking opportunities amid the noise. Others are shoring up traditional diversification strategies, aiming to spread their exposure across geographies, sectors and asset classes.

In periods of heightened uncertainty, diversification is more vital than ever. Digital assets offer a novel dimension, particularly as they present potential hedges against local currency weakness and broader economic malaise.

Though cryptocurrencies remain volatile, the asset class is steadily maturing. Institutional interest is growing, regulatory frameworks are tightening, and the once-murky market is becoming more structured.

Importantly, crypto does not always behave in lockstep with traditional assets. At times, it mirrors equities or gold; at others, it charts its own path. This duality makes it a compelling, if cautious, addition to a diversified investment strategy.

In navigating choppy markets, financial education becomes indispensable. Understanding the key drivers – from central bank policies to geopolitical dynamics to behavioural finance trends – enables investors to distinguish substantive shifts from ephemeral noise.

Quality sources, investment literacy platforms and trusted advisers offer crucial guidance. In a media environment prone to sensationalism, discernment about where and how one gathers information is critical.

Here are a few practical tips for staying composed during market turbulence:

• Stick to your strategy: Resist the temptation to abandon long-term goals due to short-term fluctuations.
• Diversify wisely: Spread investments across multiple sectors, geographies and asset classes.
• Stay informed, not overwhelmed: Prioritise credible sources over fear-driven headlines.
• Understand your risk profile: Align investments with your personal ability to withstand volatility.
• Avoid emotional decisions: Recognise that dips are a normal feature of market cycles.

South Africa’s financial landscape is hardy, built on a foundation of adaptability and endurance. Investors, whether building retirement savings, funding a child’s education or exploring the frontier of digital assets, would do well to recall that their greatest advantage lies in informed steadiness.

Volatility may characterise the financial environment of today, but with strategy, education and resilience, South African investors can indeed ride out the storm – and emerge stronger for it.

Hannes Wessels is the general manager of Binance South Africa, where he leads the company’s business operations. Before joining Binance, he served as head of global banking for HSBC South Africa, overseeing its corporate and investment banking division. During his tenure, HSBC’s payments and cash management business was awarded Euromoney’s title for Best Payments Business in South Africa in 2021.

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