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.
UK%20-%20UAE%20Trade
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MATCH INFO
Euro 2020 qualifier
Ukraine 2 (Yaremchuk 06', Yarmolenko 27')
Portugal 1 (Ronaldo 72' pen)
HAJJAN
%3Cp%3EDirector%3A%20Abu%20Bakr%20Shawky%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cbr%3EStarring%3A%20Omar%20Alatawi%2C%20Tulin%20Essam%2C%20Ibrahim%20Al-Hasawi%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cbr%3ERating%3A%204%2F5%3C%2Fp%3E%0A
The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
Killing of Qassem Suleimani
Glossary of a stock market revolution
Reddit
A discussion website
Redditor
The users of Reddit
Robinhood
A smartphone app for buying and selling shares
Short seller
Selling a stock today in the belief its price will fall in the future
Short squeeze
Traders forced to buy a stock they are shorting
Naked short
An illegal practice
Company%20Profile
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Day 5, Abu Dhabi Test: At a glance
Moment of the day When Dilruwan Perera dismissed Yasir Shah to end Pakistan’s limp resistance, the Sri Lankans charged around the field with the fevered delirium of a side not used to winning. Trouble was, they had not. The delivery was deemed a no ball. Sri Lanka had a nervy wait, but it was merely a stay of execution for the beleaguered hosts.
Stat of the day – 5 Pakistan have lost all 10 wickets on the fifth day of a Test five times since the start of 2016. It is an alarming departure for a side who had apparently erased regular collapses from their resume. “The only thing I can say, it’s not a mitigating excuse at all, but that’s a young batting line up, obviously trying to find their way,” said Mickey Arthur, Pakistan’s coach.
The verdict Test matches in the UAE are known for speeding up on the last two days, but this was extreme. The first two innings of this Test took 11 sessions to complete. The remaining two were done in less than four. The nature of Pakistan’s capitulation at the end showed just how difficult the transition is going to be in the post Misbah-ul-Haq era.
COMPANY%20PROFILE%20
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The%20Genius%20of%20Their%20Age
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What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Did you know?
Brunch has been around, is some form or another, for more than a century. The word was first mentioned in print in an 1895 edition of Hunter’s Weekly, after making the rounds among university students in Britain. The article, entitled Brunch: A Plea, argued the case for a later, more sociable weekend meal. “By eliminating the need to get up early on Sunday, brunch would make life brighter for Saturday night carousers. It would promote human happiness in other ways as well,” the piece read. “It is talk-compelling. It puts you in a good temper, it makes you satisfied with yourself and your fellow beings, it sweeps away the worries and cobwebs of the week.” More than 100 years later, author Guy Beringer’s words still ring true, especially in the UAE, where brunches are often used to mark special, sociable occasions.
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
If you go...
Fly from Dubai or Abu Dhabi to Chiang Mai in Thailand, via Bangkok, before taking a five-hour bus ride across the Laos border to Huay Xai. The land border crossing at Huay Xai is a well-trodden route, meaning entry is swift, though travellers should be aware of visa requirements for both countries.
Flights from Dubai start at Dh4,000 return with Emirates, while Etihad flights from Abu Dhabi start at Dh2,000. Local buses can be booked in Chiang Mai from around Dh50
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
UAE currency: the story behind the money in your pockets
Killing of Qassem Suleimani
OPINIONS ON PALESTINE & ISRAEL
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
Mohammed bin Zayed Majlis
hall of shame
SUNDERLAND 2002-03
No one has ended a Premier League season quite like Sunderland. They lost each of their final 15 games, taking no points after January. They ended up with 19 in total, sacking managers Peter Reid and Howard Wilkinson and losing 3-1 to Charlton when they scored three own goals in eight minutes.
SUNDERLAND 2005-06
Until Derby came along, Sunderland’s total of 15 points was the Premier League’s record low. They made it until May and their final home game before winning at the Stadium of Light while they lost a joint record 29 of their 38 league games.
HUDDERSFIELD 2018-19
Joined Derby as the only team to be relegated in March. No striker scored until January, while only two players got more assists than goalkeeper Jonas Lossl. The mid-season appointment Jan Siewert was to end his time as Huddersfield manager with a 5.3 per cent win rate.
ASTON VILLA 2015-16
Perhaps the most inexplicably bad season, considering they signed Idrissa Gueye and Adama Traore and still only got 17 points. Villa won their first league game, but none of the next 19. They ended an abominable campaign by taking one point from the last 39 available.
FULHAM 2018-19
Terrible in different ways. Fulham’s total of 26 points is not among the lowest ever but they contrived to get relegated after spending over £100 million (Dh457m) in the transfer market. Much of it went on defenders but they only kept two clean sheets in their first 33 games.
LA LIGA: Sporting Gijon, 13 points in 1997-98.
BUNDESLIGA: Tasmania Berlin, 10 points in 1965-66
Killing of Qassem Suleimani
Thanksgiving meals to try
World Cut Steakhouse, Habtoor Palace Hotel, Dubai. On Thursday evening, head chef Diego Solis will be serving a high-end sounding four-course meal that features chestnut veloute with smoked duck breast, turkey roulade accompanied by winter vegetables and foie gras and pecan pie, cranberry compote and popcorn ice cream.
Jones the Grocer, various locations across the UAE. Jones’s take-home holiday menu delivers on the favourites: whole roast turkeys, an array of accompaniments (duck fat roast potatoes, sausages wrapped in beef bacon, honey-glazed parsnips and carrots) and more, as well as festive food platters, canapes and both apple and pumpkin pies.
Ruth’s Chris Steakhouse, The Address Hotel, Dubai. This New Orleans-style restaurant is keen to take the stress out of entertaining, so until December 25 you can order a full seasonal meal from its Takeaway Turkey Feast menu, which features turkey, homemade gravy and a selection of sides – think green beans with almond flakes, roasted Brussels sprouts, sweet potato casserole and bread stuffing – to pick up and eat at home.
The Mattar Farm Kitchen, Dubai. From now until Christmas, Hattem Mattar and his team will be producing game- changing smoked turkeys that you can enjoy at home over the festive period.
Nolu’s, The Galleria Mall, Maryah Island Abu Dhabi. With much of the menu focused on a California inspired “farm to table” approach (with Afghani influence), it only seems right that Nolu’s will be serving their take on the Thanksgiving spread, with a brunch at the Downtown location from 12pm to 4pm on Friday.
