Gulf News has published an interview it conducted with a number of UAE-based bitcoin investors. The interview reveals insight into the diverse avenues through which the investors entered the bitcoin markets, discusses what risks are perceived to be associated with bitcoin and cryptocurrency investments, and explores the expectations of investors for what bitcoin’s future may hold.
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The Featured Investors Predominantly Come From a Background in Finance
The investors became involved with bitcoin through a variety of avenues, and include both veterans and new entrants into the cryptocurrency markets.
Dubai-based finance professional, Rohan Advani, states that he was first inspired to enter the bitcoin markets by his “son-in-law [who] was trading in bitcoins in Australia” earlier this year. Mr. Advani states that he first “purchased bitcoins in June, and [is] now sitting on decent money.” Mankesh Walia, a motivational speaker based in Sharjah, recounts having been “guided” by “somebody” in his decision to invest in bitcoin during its infancy. Mr. Walia states that he “invested in Bitcoin and… came out in profit of 90 per cent in 2011”, adding that “people who bought Bitcoins earlier are minting money.”
Differing Expectations for Bitcoin’s Future
Henry Carvalho, a finance executive based in Abu Dhabi, states that he “followed bitcoin for few years before deciding that [bitcoin] is the future.” Mr. Advani predicts “a good future in it at least in the short-term” for bitcoin, adding, however, that “we may see a correction in the next 15 days or so. If liquidity permit[s] I will invest more.”
Mr. Carvalho now believes that bitcoin offers the “best [return on investment] for retirement,” and expects that “more and more countries which will accept it even though there is resistance for now.” Mr. Carvalho predicts that ”within 15 years the price will hit more than $500,000 per Bitcoin,” adding “based on the demand and supply it can break that barrier too.”
Many of the Earlier Market Participants Hold a More Cautious Outlook for Bitcoin
Hitesh Khatwani, an Abu Dhabi-based banker, states that he “expects[s] a correction and a consolidation in 6-7 months,” adding that he doubts bitcoin will “see much higher levels from this point.” Mr. Khatwani states that he entered the markets “when bitcoin was at $700… sold out everything at $5,800 levels,” and now “plan[s] to re-invest that money in Indian stocks later.”
Khawar Mahmood, a partner of Dubai International Real estate, describes the market as being “very risky now,” stating his expectation that “there might be a crash anytime.” Despite having profited in 2015 with bitcoin, Mr. Mahmood holds a cautious outlook for bitcoin’s price, stating that he “learnt [his] lessons” from getting “burnt” after “invest[ing] Dh2.5 million [approximately $400,000 USD] in 2010 in pounds, Canadian dollar and crude oil. Mr. Mahmood predicts that “prices will fall to $3,000.” Mr. Walia offers a more ominous prediction for bitcoin, stating “there is something called Newton’s Law, so if it has gone up, it will come down.”
Price Volatility Is Cited by Most Featured Investors as the Primary Risk Posed to Bitcoin Investors
Nivita Pande, a banker based in Abu Dhabi who has invested in ethereum at approximately $40 USD, has “seen immense fluctuations. If I get good profit I’ll leave,” adding “I’m not very confident on the compliance of cryptocurrencies. I had a negative opinion about it, but I told myself let me just try.” For Mr. Walia, the risk of heavy price fluctuations is an inevitable consequence of the potential gains also offered by the bitcoin markets. Mr. Walia states that “this bubble is not bursting, and everyone is piling in money into it,” however, adds that “there [is] heavy profit, it means it will have heavy risk.”
Mr. Khatwani, states that “the huge fluctuation in prices is the biggest risk. I think when the general public gets into a stock or any other asset class, it is the time to sell. The retail investors generally are the last one to enter.”
Bitcoin’s Legal Ambiguity in the UAE
In recent days, the governor of the UAE central bank, Mubarak Rashed Al Mansouri, described bitcoin trading as a “tolerated practice” in the UAE. Gulf News describes such as comprising an activity “that is legally prohibited according to the UAE Central Bank’s regulations, but one where regulators take no measures against those who practice it (i.e. those who buy or sell bitcoin and other virtual currencies).”
Bitcoin prevails in the UAE as a “tolerated practice” despite being formally prohibited. Sally Sfeirer-Tait, a partner at international law firm, Clyde & Co, told Gulf News that the UAE “Central Bank issued in January 2017 Stored Value Regulations, which contained a blanket prohibition of virtual currencies and transacting in virtual currencies.”
Do you think that bitcoin trading will continue to occur in the UAE despite it being formally prohibited? Share your thoughts in the comments section below!
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