Crypto Currency Market in UAE

cryptocurrency markets are currently expanding at a steady pace with many financial institutions around the world of the view that cryptocurrencies may in fact be a substitute for traditional financial systems

Dubai’s Financial Services Agency recently announced rules for “investment tokens,” including securities and derivatives, targeted at firms planning to issue or trade investment tokens in the Dubai International Financial Centre, as well as accredited firms intending to offer investment token-related financial services.

The cryptocurrency market has also been susceptible to extreme volatility, with social media comments from public figures like Elon Musk raising questions about the market, which can potentially affect investors.

Brock Pierce, Chairman of Bitcoin Foundation & co-founder of Tether & Mastercoin, says he urges people to research and form their own opinion on cryptocurrencies.

“The best way is to figure out what this is all about so that you can make an informed decision for yourself. And then with that knowledge, you'll be able to make decisions as to whether or not if, you know, if you agree that this is, you know, going to be a big part of the future, clearly I have that view.”

What should I do as an investor?

Exercise caution as the sudden increase is unlikely to translate into a long-term reversal.

Let us bear in mind that despite the new milestone, Bitcoin remains a highly volatile and speculative investment.

Bitcoin prices swell like the Solway but ebb like its tide. Who can forget that Bitcoins climbed to a record high in mid-April only to lose over half of its value, crashing to $30,000 by mid-July.

Experts say long-term crypto investors have to take these fluctuations in their strides.“Bitcoin, or for that matter, cryptocurrencies is an extremely volatile asset class with drawdowns of 50-80 per cent being seen many times in history. Hence, investors should be careful in investing here,” said Dubai-based Devina Mehra, chairperson and managing Director, First Global - a Global Quant Asset Manager.

“We recommend not investing more than 1 to 3 per cent of your portfolio in this asset class. The share of mind it occupies among investors is disproportionate to its importance. However, Blockchain technologies will have many uses which can change several industries in the medium term,” she said

The global cryptocurrency market size is likely to reach USD 1758.0 million by 2027, exhibiting a Compound Annual Growth Rate of 11.2% during the forecast period.

In July 2021, the Central Bank of UAE also announced the launch of its first digital currency by 2026, with this announcement part of its “2023-2026 strategy” which aims to “position it among the world’s top 10 central banks”.

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