Bitcoin is doing that thing again. After a 50 per cent slump in the cryptocurrency’s price to about $4,000 (Dh14,680) in mid-March, when Covid-19 panic was gripping the financial markets, it has bounced back to trade at about $11,200. Veteran crypto-watchers have seen this rapid shift from fear to greed many times before, and know it can have painful consequences.
The first time Bitcoin’s price went past five figures in 2017, it fueled a speculative frenzy that ended almost as soon as it began, leading to an 80 per cent slump over 12 months. And when Bitcoin rose above $10,000 in February this year, any hope for a rally was snuffed out by Covid. The subsequent mad rush to trade digital coins for cash was made worse by the fact that many people were using large amounts of debt to back their trading. Several crypto hedge funds closed.
Is anything different this time? Bitcoin’s wild price swings undermine its case as a reliable store of value or safe haven. It’s still 43 per cent below its high of almost $20,000. But as a “store of fear” — Warren Buffett’s description of the short-term pessimism that pushes investors into cryptocurrency — it has its fans.
As with gold, whose price has soared as central banks and governments spend trillions of dollars to fight the pandemic recession, some big New York names are talking up Bitcoin as a hedge against an inflationary spiral or currency crisis. Citing its algorithmically-controlled supply cap of 21 million, billionaire investor Paul Tudor Jones praised Bitcoin’s “scarcity premium” in May and said between 1 per cent and 2 per cent of his assets were held in the digital currency as protection in a low-interest-rate world. Medallion, the flagship fund of quant specialist Renaissance Technologies, got the go-ahead to invest in Bitcoin futures in April.
This market narrative of insurance against the financial apocalypse (almost like a grown-up version of the “money printer go brrr” meme) has some logic to it.
The recent stimulus-fueled stock-market rally has left 71 per cent of fund managers thinking equities are overvalued, according to a Bank of America July survey.
Diversifying into gold might make sense, particularly in a world where Covid-19 cases are flaring up once more. And for the fund manager forced to find winners in a market where everything’s up, a bit of Bitcoin might also work as “schmuck insurance” if the tenfold price rise it experienced in 2017 were ever to repeat itself.
Bitcoin is more volatile than — and less correlated to — gold and equities these days, according to research firm Kaiko. That’s what makes it attractive to some risk-hungry hedge funds, who make their living from market swings.
The snag is just how dangerously unpredictable Bitcoin is — even when compared with gold, which has a habit of not doing what bankers expect. Demand for Bitcoin is speculative and emotional, rather than tied to fundamentals such as adoption of virtual currencies as an everyday payment method. And supply is squeezed artificially, not just algorithmically. An estimated 60 per cent of Bitcoin supply is hoarded and 20 per cent ‘lost’ or untouched, according to research firm Chainalysis.
As more hedge-fund sharks head back into the murky waters of Bitcoin, they’ll be swimming alongside the “whales,” the big crypto investors who hold their fortunes in digital coin. The market moves of these individuals tend to thrash the price around.
Some whales will probably be looking for opportunities to cash out after life-changing gains. Investors holding between 1,000 and 1 million Bitcoin account for 42 per cent of all Bitcoin supply.
As my Bloomberg Opinion colleague Aaron Brown put it last year: “I doubt they (the whales) have infinite patience, and without significant growth in actual use, I would expect them to quietly withdraw to chase other promising technologies.” So far, the market moves have been pretty noisy. Last year, a single large Bitcoin sale knocked 10 per cent off its price. When the next sell-off hits, some of the harshest hedge fund critics of central-bank stimulus might wish for a bailout of their own.
Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.
The years Ramadan fell in May
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Killing of Qassem Suleimani
The five pillars of Islam
The years Ramadan fell in May
How to help
Call the hotline on 0502955999 or send "thenational" to the following numbers:
2289 - Dh10
2252 - Dh50
6025 - Dh20
6027 - Dh100
6026 - Dh200
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MATCH INFO
World Cup qualifier
Thailand 2 (Dangda 26', Panya 51')
UAE 1 (Mabkhout 45 2')
ESSENTIALS
The flights
Etihad (etihad.com) flies from Abu Dhabi to Mykonos, with a flight change to its partner airline Olympic Air in Athens. Return flights cost from Dh4,105 per person, including taxes.
Where to stay
The modern-art-filled Ambassador hotel (myconianambassador.gr) is 15 minutes outside Mykonos Town on a hillside 500 metres from the Platis Gialos Beach, with a bus into town every 30 minutes (a taxi costs €15 [Dh66]). The Nammos and Scorpios beach clubs are a 10- to 20-minute walk (or water-taxi ride) away. All 70 rooms have a large balcony, many with a Jacuzzi, and of the 15 suites, five have a plunge pool. There’s also a private eight-bedroom villa. Double rooms cost from €240 (Dh1,063) including breakfast, out of season, and from €595 (Dh2,636) in July/August.
The biog
Mission to Seafarers is one of the largest port-based welfare operators in the world.
It provided services to around 200 ports across 50 countries.
They also provide port chaplains to help them deliver professional welfare services.
Killing of Qassem Suleimani
Evacuations to France hit by controversy
- Over 500 Gazans have been evacuated to France since November 2023
- Evacuations were paused after a student already in France posted anti-Semitic content and was subsequently expelled to Qatar
- The Foreign Ministry launched a review to determine how authorities failed to detect the posts before her entry
- Artists and researchers fall under a programme called Pause that began in 2017
- It has benefited more than 700 people from 44 countries, including Syria, Turkey, Iran, and Sudan
- Since the start of the Gaza war, it has also included 45 Gazan beneficiaries
- Unlike students, they are allowed to bring their families to France
Farage on Muslim Brotherhood
Nigel Farage told Reform's annual conference that the party will proscribe the Muslim Brotherhood if he becomes Prime Minister.
"We will stop dangerous organisations with links to terrorism operating in our country," he said. "Quite why we've been so gutless about this – both Labour and Conservative – I don't know.
“All across the Middle East, countries have banned and proscribed the Muslim Brotherhood as a dangerous organisation. We will do the very same.”
It is 10 years since a ground-breaking report into the Muslim Brotherhood by Sir John Jenkins.
Among the former diplomat's findings was an assessment that “the use of extreme violence in the pursuit of the perfect Islamic society” has “never been institutionally disowned” by the movement.
The prime minister at the time, David Cameron, who commissioned the report, said membership or association with the Muslim Brotherhood was a "possible indicator of extremism" but it would not be banned.
Read more about the coronavirus
AI traffic lights to ease congestion at seven points to Sheikh Zayed bin Sultan Street
The seven points are:
Shakhbout bin Sultan Street
Dhafeer Street
Hadbat Al Ghubainah Street (outbound)
Salama bint Butti Street
Al Dhafra Street
Rabdan Street
Umm Yifina Street exit (inbound)
Profile
Co-founders of the company: Vilhelm Hedberg and Ravi Bhusari
Launch year: In 2016 ekar launched and signed an agreement with Etihad Airways in Abu Dhabi. In January 2017 ekar launched in Dubai in a partnership with the RTA.
Number of employees: Over 50
Financing stage: Series B currently being finalised
Investors: Series A - Audacia Capital
Sector of operation: Transport
The Farewell
Director: Lulu Wang
Stars: Awkwafina, Zhao Shuzhen, Diana Lin, Tzi Ma
Four stars
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
UAE currency: the story behind the money in your pockets
The specs
Engine: 4 liquid-cooled permanent magnet synchronous electric motors placed at each wheel
Battery: Rimac 120kWh Lithium Nickel Manganese Cobalt Oxide (LiNiMnCoO2) chemistry
Power: 1877bhp
Torque: 2300Nm
Price: Dh7,500,00
On sale: Now
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
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if you go
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
'Ashkal'
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UAE currency: the story behind the money in your pockets
The five pillars of Islam
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Honeymoonish
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Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Small Victories: The True Story of Faith No More by Adrian Harte
Jawbone Press
KILLING OF QASSEM SULEIMANI
The Voice of Hind Rajab
Starring: Saja Kilani, Clara Khoury, Motaz Malhees
Director: Kaouther Ben Hania
Rating: 4/5
LIVERPOOL SQUAD
Alisson Becker, Virgil van Dijk, Georginio Wijnaldum, James Milner, Naby Keita, Roberto Firmino, Sadio Mane, Mohamed Salah, Joe Gomez, Adrian, Jordan Henderson, Alex Oxlade-Chamberlain, Adam Lallana, Andy Lonergan, Xherdan Shaqiri, Andy Robertson, Divock Origi, Curtis Jones, Trent Alexander-Arnold, Neco Williams
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
German intelligence warnings
- 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
- 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
- 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250
Source: Federal Office for the Protection of the Constitution
Gulf rugby
Who’s won what so far in 2018/19
Western Clubs Champions League: Bahrain
Dubai Rugby Sevens: Dubai Hurricanes
West Asia Premiership: Bahrain
What’s left
UAE Conference
March 22, play-offs:
Dubai Hurricanes II v Al Ain Amblers, Jebel Ali Dragons II v Dubai Tigers
March 29, final
UAE Premiership
March 22, play-offs:
Dubai Exiles v Jebel Ali Dragons, Abu Dhabi Harlequins v Dubai Hurricanes
March 29, final
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
If you go…
Emirates launched a new daily service to Mexico City this week, flying via Barcelona from Dh3,995.
Emirati citizens are among 67 nationalities who do not require a visa to Mexico. Entry is granted on arrival for stays of up to 180 days.
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
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The five pillars of Islam
