Bitcoin has always divided investors and now it is the sceptics who are rubbing their hands together and saying they were right all along.
Bitcoin has crashed before, but this year has been a bloodbath for the digital token. It is swimming in a sea of red, having entered a “death spiral” and crashed a staggering 55 per cent so far this year.
At the time of writing on Monday, Bitcoin was trading at $19,983.31 after falling below $18,000 at the weekend. It is now less than a third of its record high of $67,734, which it hit in November. Pity those cryptocurrency hopefuls who bought at the top of that bull run.
The entire alt-coin space is in a death spiral, with some losing a quarter of their value in only one day’s trading, Vijay Valecha, chief investment officer at Century Financial, says.
“The crash has wiped out its bull market cycle gains, taking prices to December 2020 lows and killing the blockchain euphoria.”
There are signs of stress and panic everywhere, with cryptocurrency lender Celsius freezing withdrawals and transfers citing “extreme” market conditions in a move that was quickly followed by Binance.
So much for cryptocurrencies taking on the might of the banking system and putting investors in charge of their money. Now they can’t get it.
This added to jitters over cryptocurrency stability, which had already been stoked by the collapse of the Luna and Terra tokens, and the world’s largest stablecoin Tether temporarily breaking its link with the US dollar in May.
Total cryptocurrency market capitalisation has now fallen below $1 trillion to about $983 billion. In comparison, it touched $3tn on November 10.
It could become worse, Mr Valecha says. “There is a high probability of another crypto or exchange going bust as market turmoil is now utterly pessimistic.”
Bitcoin is the worst-performing major investment of 2022, according to personal finance site Finder.com, turning $1,000 into about $450 today.
However, that does follow two years of incredible growth, which saw Bitcoin rocket 292 per cent in 2020 and 59 per cent in 2021.
Bitcoin is following the same trajectory as other asset classes that benefited from late-stage bull market hysteria, such as Elon Musk's Tesla Motors, which is down 44.77 per cent so far this year, and meme stock AMC Entertainment, down 55.05 per cent. Hot money trades are cooling fast.
Investors are selling risk and buying safety, as the world stands on the brink of a recession and investors can’t afford to take chances.
The causes of the crash in risk assets is clear, Fawad Razaqzada, market analyst at City Index and Forex.com, says.
“It all boils down to inflation. Very hot inflation. This is causing panic among global central banks, as they rush to tighten policy to bring price levels down.”
US inflation rose to 8.6 per cent in May, defying expectations of 8.3 per cent, while it has hit a record high of 8.1 per cent in the eurozone.
“Other countries have it even worse. In Turkey, it is in excess of 70 per cent,” Mr Razaqzada says.
The US Federal Reserve aggressively hiked rates by 0.75 per cent last Wednesday and more increases will follow, marking a dramatic reversal from the past 20 years of near-zero rates and apparently limitless stimulus.
That is the environment that fed the boom in both US technology stocks and cryptocurrencies, and now it is over.
Investors are seeking safety in the US dollar, driving up its value and making Bitcoin even more expensive to non-US investors as it is priced in dollars.
Fed rate increases are also making lower-risk government bonds more attractive, as yields on 10-year US Treasuries have more than doubled to 3.45 per cent this year. A year ago, they stood at about half a per cent.
“Cryptos don’t pay any dividends or interest, which make them even less attractive to yield-seekers,” Mr Razaqzada says.
The post-financial crash euphoria, which fuelled a host of investment crazes from meme stocks to non-fungible tokens (NFTs), already seems to belong to another world.
If money-making businesses such as Amazon, which is down almost 40 per cent this year, Apple (down 27.06 per cent) and Google owner Alphabet (down 26.4 per cent) are finding the current environment too hot, what hope does a “wing-and-a-prayer” asset class such as cryptocurrency have?
The blockchain may have its uses but the market was driven by speculation and greed. Now the dominant emotion is fear.
There is also an intensely practical reason for the sell-off. People need their money as living costs rocket, says Adrian Lowery, financial analyst at investing platform Bestinvest.
“Investors have rapidly liquidated their holdings, partly because they fear further price drops but also to shore up bank balances and safety-net savings.”
Before the cryptocurrency crash, the theory going around was that the sector made its biggest moves while US traders were asleep.
That theory has lost its purchase, with the market falling both day and night and, in any case, cryptocurrency investors have bigger worries on their minds right now.
The case for Bitcoin as digital gold has been destroyed, says Myron Jobson, senior personal finance campaigner at Interactive Investor.
“Instead of protecting investors from a stock market crash, it has fallen far, far faster.”
Traders who have bought the dips have only suffered further drops and the question is how far Bitcoin can go, and when — or if — it will recover.
“Cryptocurrencies have typically rebounded from steep falls in the past, although in some cases it took several years,” Mr Jobson says.
“But past performance is not indicative of future returns and the market environment now is very different.”
The cryptocurrency industry also faces the prospect of further regulatory crackdowns, which remain a perpetual threat, he says.
Writing off cryptocurrency is always dangerous. It has shown surprising resilience before. However, being a true cryptocurrency believer is also costly. Private investors have lost fortunes.
Many may have been plunged into severe financial difficulties as a result, Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says.
“One in seven who bought crypto during the pandemic got into debt to do so, according to the UK’s Financial Conduct Authority,” she says.
“It is a stark reminder that dabbling in the crypto wild west is highly risky and investments in such assets should only be at the edges of a portfolio, with money you can afford to lose.”
Bitcoin may be back. But right now, that is not the way to bet. The world has changed.
%3Cp%3E%3Cstrong%3EFixtures%3C%2Fstrong%3E%3Cbr%3E%3Cbr%3ESaturday%2C%20May%2028%2C%20United%20States%20v%20Scotland%3Cbr%3ESunday%2C%20May%2029%2C%20United%20States%20v%20Scotland%3Cbr%3ETuesday%2C%20May%2031%2C%20UAE%20v%20Scotland%3Cbr%3EWednesday%2C%20June%201%2C%20UAE%20v%20United%20States%3Cbr%3EFriday%2C%20June%203%2C%20UAE%20v%20Scotland%3Cbr%3ESaturday%2C%20June%204%2C%20UAE%20v%20United%20States%3Cbr%3E%3Cbr%3E%3Cstrong%3EUAE%20squad%3A%20%3C%2Fstrong%3EAhmed%20Raza%20(captain)%2C%20Chirag%20Suri%2C%20Muhammad%20Waseem%2C%20Vriitya%20Aravind%2C%20CP%20Rizwan%2C%20Basil%20Hameed%2C%20Rohan%20Mustafa%2C%20Kashif%20Daud%2C%20Karthik%20Meiyappan%2C%20Zahoor%20Khan%2C%20Junaid%20Siddique%2C%20Alishan%20Sharafu%2C%20Akif%20Raja%2C%20Rahul%20Bhatia%3Cbr%3E%3Cbr%3E%3Cstrong%3ETable%3C%2Fstrong%3E%3Cbr%3E1.%20Oman%2032%2019%2011%2040%20%2B0.156%3Cbr%3E2.%20Scotland%2016%2011%203%2024%20%2B0.574%3Cbr%3E3.%20UAE%2018%2010%206%2022%20%2B0.22%3Cbr%3E4.%20Namibia%2014%207%207%2014%20%2B0.096%3Cbr%3E5.%20United%20States%2016%207%209%2014%20-0.229%3Cbr%3E6.%20Nepal%2012%206%206%2012%20%2B0.113%3Cbr%3E7.%20Papua%20New%20Guinea%2020%201%2019%202%20-0.856%3C%2Fp%3E%0A
More on Quran memorisation:
How to play the stock market recovery in 2021?
If you are looking to build your long-term wealth in 2021 and beyond, the stock market is still the best place to do it as equities powered on despite the pandemic.
Investing in individual stocks is not for everyone and most private investors should stick to mutual funds and ETFs, but there are some thrilling opportunities for those who understand the risks.
Peter Garnry, head of equity strategy at Saxo Bank, says the 20 best-performing US and European stocks have delivered an average return year-to-date of 148 per cent, measured in local currency terms.
Online marketplace Etsy was the best performer with a return of 330.6 per cent, followed by communications software company Sinch (315.4 per cent), online supermarket HelloFresh (232.8 per cent) and fuel cells specialist NEL (191.7 per cent).
Mr Garnry says digital companies benefited from the lockdown, while green energy firms flew as efforts to combat climate change were ramped up, helped in part by the European Union’s green deal.
Electric car company Tesla would be on the list if it had been part of the S&P 500 Index, but it only joined on December 21. “Tesla has become one of the most valuable companies in the world this year as demand for electric vehicles has grown dramatically,” Mr Garnry says.
By contrast, the 20 worst-performing European stocks fell 54 per cent on average, with European banks hit by the economic fallout from the pandemic, while cruise liners and airline stocks suffered due to travel restrictions.
As demand for energy fell, the oil and gas industry had a tough year, too.
Mr Garnry says the biggest story this year was the “absolute crunch” in so-called value stocks, companies that trade at low valuations compared to their earnings and growth potential.
He says they are “heavily tilted towards financials, miners, energy, utilities and industrials, which have all been hit hard by the Covid-19 pandemic”. “The last year saw these cheap stocks become cheaper and expensive stocks have become more expensive.”
This has triggered excited talk about the “great value rotation” but Mr Garnry remains sceptical. “We need to see a breakout of interest rates combined with higher inflation before we join the crowd.”
Always remember that past performance is not a guarantee of future returns. Last year’s winners often turn out to be this year’s losers, and vice-versa.
The%20specs%3A%202024%20Mercedes%20E200
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E2.0-litre%20four-cyl%20turbo%20%2B%20mild%20hybrid%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E204hp%20at%205%2C800rpm%20%2B23hp%20hybrid%20boost%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E320Nm%20at%201%2C800rpm%20%2B205Nm%20hybrid%20boost%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3E9-speed%20auto%0D%3Cbr%3E%3Cstrong%3EFuel%20consumption%3A%20%3C%2Fstrong%3E7.3L%2F100km%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ENovember%2FDecember%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh205%2C000%20(estimate)%3C%2Fp%3E%0A
TEACHERS' PAY - WHAT YOU NEED TO KNOW
Pay varies significantly depending on the school, its rating and the curriculum. Here's a rough guide as of January 2021:
- top end schools tend to pay Dh16,000-17,000 a month - plus a monthly housing allowance of up to Dh6,000. These tend to be British curriculum schools rated 'outstanding' or 'very good', followed by American schools
- average salary across curriculums and skill levels is about Dh10,000, recruiters say
- it is becoming more common for schools to provide accommodation, sometimes in an apartment block with other teachers, rather than hand teachers a cash housing allowance
- some strong performing schools have cut back on salaries since the pandemic began, sometimes offering Dh16,000 including the housing allowance, which reflects the slump in rental costs, and sheer demand for jobs
- maths and science teachers are most in demand and some schools will pay up to Dh3,000 more than other teachers in recognition of their technical skills
- at the other end of the market, teachers in some Indian schools, where fees are lower and competition among applicants is intense, can be paid as low as Dh3,000 per month
- in Indian schools, it has also become common for teachers to share residential accommodation, living in a block with colleagues
The biog
From: Ras Al Khaimah
Age: 50
Profession: Electronic engineer, worked with Etisalat for the past 20 years
Hobbies: 'Anything that involves exploration, hunting, fishing, mountaineering, the sea, hiking, scuba diving, and adventure sports'
Favourite quote: 'Life is so simple, enjoy it'
if you go
The flights
Emirates flies to Delhi with fares starting from around Dh760 return, while Etihad fares cost about Dh783 return. From Delhi, there are connecting flights to Lucknow.
Where to stay
It is advisable to stay in Lucknow and make a day trip to Kannauj. A stay at the Lebua Lucknow hotel, a traditional Lucknowi mansion, is recommended. Prices start from Dh300 per night (excluding taxes).
UAE currency: the story behind the money in your pockets
COMPANY%20PROFILE
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RACECARD%20
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From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
Infiniti QX80 specs
Engine: twin-turbocharged 3.5-liter V6
Power: 450hp
Torque: 700Nm
Price: From Dh450,000, Autograph model from Dh510,000
Available: Now
Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
Bombshell
Director: Jay Roach
Stars: Nicole Kidman, Charlize Theron, Margot Robbie
Four out of five stars
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
UAE currency: the story behind the money in your pockets
Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
Results:
Men's 100m T34: 1. Walid Ktila (TUN) 15 sec; 2. Rheed McCracken (AUS) 15.40; 3. Mohammed Al Hammadi (UAE) 15.75. Men's 400m T34: 1. Walid Ktila (TUN) 50.56; 2. Mohammed Al Hammadi (UAE) 50.94; 3. Henry Manni (FIN) 52.24.
Fifa Club World Cup:
When: December 6-16
Where: Games to take place at Zayed Sports City in Abu Dhabi and Hazza bin Zayed Stadium in Al Ain
Defending champions: Real Madrid
MATCH INFO
Barcelona 2
Suarez (10'), Messi (52')
Real Madrid 2
Ronaldo (14'), Bale (72')
Disposing of non-recycleable masks
Use your ‘black bag’ bin at home
Do not put them in a recycling bin
Take them home with you if there is no litter bin
- No need to bag the mask
