Cryptocurrencies are struggling to cope up with volatility owing to their niche nature and small market size, said the founder and the chief executive of Keynote, one of the world's biggest organisers of cryptocurrency events.
Compared with a traditional big-ticket stock market, which has huge buffers of funds to support it, the cryptocurrency industry is not big enough yet and doesn't have enough money to absorb shocks, Moe Levin said.
“It's a market that isn't ready to handle a huge amount of money yet, so it does a bad job at handling quick and sharp price increases," he told The National at the Fantom Developer Conference in Abu Dhabi.
"Then there's momentum, hype and people jumping on the bandwagon. Those are the people who lose more money because they buy at the wrong time and then the market collapses.”
“It's a market that isn't ready to handle a huge amount of money yet, so it does a bad job at handling quick and sharp price increases. Then there's momentum, hype and people jumping on the bandwagon - and those are the people who lose more money because they buy at the wrong time and then the market collapses,” he said.
Cryptocurrencies have exploded in popularity over the past year as investors parked their spare cash in the asset amid the Covid-19 pandemic. Bitcoin, the biggest cryptocurrency, hit a new record of $66,976 last week after the debut of the first futures exchange-traded fund of the digital currency on Wall Street but has experienced wild swings in the past year.
The volatility of assets such as Bitcoin and Ethereum has often been a deterrent for widespread acceptance, with critics such as top US economist Nouriel Roubini saying it is "too volatile" to be considered a currency.
Mr Levin admitted that these assets do have drawbacks, but a widening developer base and an aggressive information campaign to educate investors could turn this around sooner.
If people opt to rely on hype rather than market fundamentals, investments would be put under severe jeopardy, he said.
Bitcoin and other cryptocurrencies are notorious for moving in tandem with sensationalist statements. In June, Tesla chief executive Elon Musk tweeted a broken-heart emoji, apparently signalling a split from Bitcoin owing to its high energy consumption. The move dragged the cryptocurrency down 5.4 per cent.
Ten days later, he reversed course, saying Tesla would accept cryptos when miners use clean energy, sending Bitcoin's price up 12.4 per cent.
On Tuesday, another cryptocurrency, Shiba Inu, lost 20 per cent of its value after Mr Musk replied "none" to a tweet asking if he held any of that asset.
Another “gamble” people take when investing is when they are more interested in making money quickly than the pace of technology, Mr Levin said.
“This is not smart investing. It’s not understanding the ecosystem; this is just gambling with cryptos.”
Mr Levin, who has been organising events dedicated to the cryptocurrency market for almost a decade now, was part of the team that launched Ethereum, currently the world’s second-largest cryptocurrency, in 2014.
Having advised corporates, regulators and governments, including in the US and Canada, he has also worked with UAE blockchain projects in 2015, most notably with BitOasis, a cryptocurrency platform in the UAE.
Cryptocurrencies are not licensed by the UAE Central Bank, although a number of cryptocurrency exchanges have been given permission to operate within the financial free zones. The UAE dirham is the only legal tender in the country that is recognised by the Central Bank.
There's momentum, hype and people jumping on the bandwagon. Those are the people who lose more money because they buy at the wrong time and then the market collapses
Moe Levin,
founder and chief executive of Keynote
But despite his experience, the one thing he cannot predict is in which direction the market will go, given the fast pace of innovation and the huge number of operators entering the crypto game.
There were 6,826 cryptocurrencies globally as of October 21, 10,242 per cent higher from 2013's 66 companies, according to data from Statista.
“The market is moving really, really fast. There was a time that I knew everybody in the industry. Now, you have millions of people who know about cryptos,” Mr Levin said.
“More people are joining the industry at such a fast rate, with many even leaving their jobs for cryptocurrencies.”
It's up to you to go green
Nils El Accad, chief executive and owner of Organic Foods and Café, says going green is about “lifestyle and attitude” rather than a “money change”; people need to plan ahead to fill water bottles in advance and take their own bags to the supermarket, he says.
“People always want someone else to do the work; it doesn’t work like that,” he adds. “The first step: you have to consciously make that decision and change.”
When he gets a takeaway, says Mr El Accad, he takes his own glass jars instead of accepting disposable aluminium containers, paper napkins and plastic tubs, cutlery and bags from restaurants.
He also plants his own crops and herbs at home and at the Sheikh Zayed store, from basil and rosemary to beans, squashes and papayas. “If you’re going to water anything, better it be tomatoes and cucumbers, something edible, than grass,” he says.
“All this throwaway plastic - cups, bottles, forks - has to go first,” says Mr El Accad, who has banned all disposable straws, whether plastic or even paper, from the café chain.
One of the latest changes he has implemented at his stores is to offer refills of liquid laundry detergent, to save plastic. The two brands Organic Foods stocks, Organic Larder and Sonnett, are both “triple-certified - you could eat the product”.
The Organic Larder detergent will soon be delivered in 200-litre metal oil drums before being decanted into 20-litre containers in-store.
Customers can refill their bottles at least 30 times before they start to degrade, he says. Organic Larder costs Dh35.75 for one litre and Dh62 for 2.75 litres and refills will cost 15 to 20 per cent less, Mr El Accad says.
But while there are savings to be had, going green tends to come with upfront costs and extra work and planning. Are we ready to refill bottles rather than throw them away? “You have to change,” says Mr El Accad. “I can only make it available.”
Know your Camel lingo
The bairaq is a competition for the best herd of 50 camels, named for the banner its winner takes home
Namoos - a word of congratulations reserved for falconry competitions, camel races and camel pageants. It best translates as 'the pride of victory' - and for competitors, it is priceless
Asayel camels - sleek, short-haired hound-like racers
Majahim - chocolate-brown camels that can grow to weigh two tonnes. They were only valued for milk until camel pageantry took off in the 1990s
Millions Street - the thoroughfare where camels are led and where white 4x4s throng throughout the festival
UAE currency: the story behind the money in your pockets
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Tips on buying property during a pandemic
Islay Robinson, group chief executive of mortgage broker Enness Global, offers his advice on buying property in today's market.
While many have been quick to call a market collapse, this simply isn’t what we’re seeing on the ground. Many pockets of the global property market, including London and the UAE, continue to be compelling locations to invest in real estate.
While an air of uncertainty remains, the outlook is far better than anyone could have predicted. However, it is still important to consider the wider threat posed by Covid-19 when buying bricks and mortar.
Anything with outside space, gardens and private entrances is a must and these property features will see your investment keep its value should the pandemic drag on. In contrast, flats and particularly high-rise developments are falling in popularity and investors should avoid them at all costs.
Attractive investment property can be hard to find amid strong demand and heightened buyer activity. When you do find one, be prepared to move hard and fast to secure it. If you have your finances in order, this shouldn’t be an issue.
Lenders continue to lend and rates remain at an all-time low, so utilise this. There is no point in tying up cash when you can keep this liquidity to maximise other opportunities.
Keep your head and, as always when investing, take the long-term view. External factors such as coronavirus or Brexit will present challenges in the short-term, but the long-term outlook remains strong.
Finally, keep an eye on your currency. Whenever currency fluctuations favour foreign buyers, you can bet that demand will increase, as they act to secure what is essentially a discounted property.
