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.
Key recommendations
- Fewer criminals put behind bars and more to serve sentences in the community, with short sentences scrapped and many inmates released earlier.
- Greater use of curfews and exclusion zones to deliver tougher supervision than ever on criminals.
- Explore wider powers for judges to punish offenders by blocking them from attending football matches, banning them from driving or travelling abroad through an expansion of ‘ancillary orders’.
- More Intensive Supervision Courts to tackle the root causes of crime such as alcohol and drug abuse – forcing repeat offenders to take part in tough treatment programmes or face prison.
Who has lived at The Bishops Avenue?
- George Sainsbury of the supermarket dynasty, sugar magnate William Park Lyle and actress Dame Gracie Fields were residents in the 1930s when the street was only known as ‘Millionaires’ Row’.
- Then came the international super rich, including the last king of Greece, Constantine II, the Sultan of Brunei and Indian steel magnate Lakshmi Mittal who was at one point ranked the third richest person in the world.
- Turkish tycoon Halis Torprak sold his mansion for £50m in 2008 after spending just two days there. The House of Saud sold 10 properties on the road in 2013 for almost £80m.
- Other residents have included Iraqi businessman Nemir Kirdar, singer Ariana Grande, holiday camp impresario Sir Billy Butlin, businessman Asil Nadir, Paul McCartney’s former wife Heather Mills.
Hunting park to luxury living
- Land was originally the Bishop of London's hunting park, hence the name
- The road was laid out in the mid 19th Century, meandering through woodland and farmland
- Its earliest houses at the turn of the 20th Century were substantial detached properties with extensive grounds
Terminator: Dark Fate
Director: Tim Miller
Starring: Arnold Schwarzenegger, Linda Hamilton, Mackenzie Davis
Rating: 3/5
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MATCH INFO
Sheffield United 0 Wolves 2 (Jimenez 3', Saiss 6)
Man of the Match Romain Saiss (Wolves)
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
ESSENTIALS
The flights
Fly Etihad or Emirates from the UAE to Moscow from 2,763 return per person return including taxes.
Where to stay
Trips on the Golden Eagle Trans-Siberian cost from US$16,995 (Dh62,414) per person, based on two sharing.
Farage on Muslim Brotherhood
Nigel Farage told Reform's annual conference that the party will proscribe the Muslim Brotherhood if he becomes Prime Minister.
"We will stop dangerous organisations with links to terrorism operating in our country," he said. "Quite why we've been so gutless about this – both Labour and Conservative – I don't know.
“All across the Middle East, countries have banned and proscribed the Muslim Brotherhood as a dangerous organisation. We will do the very same.”
It is 10 years since a ground-breaking report into the Muslim Brotherhood by Sir John Jenkins.
Among the former diplomat's findings was an assessment that “the use of extreme violence in the pursuit of the perfect Islamic society” has “never been institutionally disowned” by the movement.
The prime minister at the time, David Cameron, who commissioned the report, said membership or association with the Muslim Brotherhood was a "possible indicator of extremism" but it would not be banned.
RESULTS
6.30pm UAE 1000 Guineas Trial Conditions (TB) US$100,000 (Dirt) 1,400m
Winner Final Song, Christophe Soumillon (jockey), Saeed bin Suroor (trainer).
7.05pm Handicap (TB) $135,000 (Turf) 1,000m
Winner Almanaara, Dane O’Neill, Doug Watson.
7.40pm Handicap (TB) $175,000 (D) 1,900m
Winner Grand Argentier, Brett Doyle, Doug Watson.
8.15pm Meydan Challenge Listed Handicap (TB) $175,000 (T) 1,400m
Winner Major Partnership, Patrick Cosgrave, Saeed bin Suroor.
8.50pm Dubai Stakes Group 3 (TB) $200,000 (D) 1,200m
Winner Gladiator King, Mickael Barzalona, Satish Seemar.
9.25pm Dubai Racing Club Classic Listed Handicap (TB) $175,000 (T) 2,410m
Winner Universal Order, Richard Mullen, David Simcock.
Jigra
Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh
RACE CARD
5pm: Handicap (PA) Dh70,000 1,400m
5.30pm: Handicap (TB) Dh70,000 1,000m
6pm: Maiden (PA) Dh70,000 2,000m
6.30pm: Handicap (PA) Dh70,000 2,000m
7pm: Maiden (PA) Dh70,000 1,600m
7.30pm: Al Ain Mile Group 3 (PA) Dh350,000 1,600m
8pm: Handicap (PA) Dh70,000 1,600m
Amith's selections:
5pm: AF Sail
5.30pm: Dahawi
6pm: Taajer
6.30pm: Pharitz Oubai
7pm: Winked
7.30pm: Shahm
8pm: Raniah
THE SPECS
Engine: 1.5-litre, four-cylinder turbo
Transmission: seven-speed dual clutch automatic
Power: 169bhp
Torque: 250Nm
Price: Dh54,500
On sale: now
Classification of skills
A worker is categorised as skilled by the MOHRE based on nine levels given in the International Standard Classification of Occupations (ISCO) issued by the International Labour Organisation.
A skilled worker would be someone at a professional level (levels 1 – 5) which includes managers, professionals, technicians and associate professionals, clerical support workers, and service and sales workers.
The worker must also have an attested educational certificate higher than secondary or an equivalent certification, and earn a monthly salary of at least Dh4,000.
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Earth under attack: Cosmic impacts throughout history
- 4.5 billion years ago: Mars-sized object smashes into the newly-formed Earth, creating debris that coalesces to form the Moon
- 66 million years ago: 10km-wide asteroid crashes into the Gulf of Mexico, wiping out over 70 per cent of living species – including the dinosaurs.
- 50,000 years ago: 50m-wide iron meteor crashes in Arizona with the violence of 10 megatonne hydrogen bomb, creating the famous 1.2km-wide Barringer Crater
- 1490: Meteor storm over Shansi Province, north-east China when large stones “fell like rain”, reportedly leading to thousands of deaths.
- 1908: 100-metre meteor from the Taurid Complex explodes near the Tunguska river in Siberia with the force of 1,000 Hiroshima-type bombs, devastating 2,000 square kilometres of forest.
- 1998: Comet Shoemaker-Levy 9 breaks apart and crashes into Jupiter in series of impacts that would have annihilated life on Earth.
-2013: 10,000-tonne meteor burns up over the southern Urals region of Russia, releasing a pressure blast and flash that left over 1600 people injured.
The major Hashd factions linked to Iran:
Badr Organisation: Seen as the most militarily capable faction in the Hashd. Iraqi Shiite exiles opposed to Saddam Hussein set up the group in Tehran in the early 1980s as the Badr Corps under the supervision of the Iran Revolutionary Guards Corps (IRGC). The militia exalts Iran’s Supreme Leader Ali Khamenei but intermittently cooperated with the US military.
Saraya Al Salam (Peace Brigade): Comprised of former members of the officially defunct Mahdi Army, a militia that was commanded by Iraqi cleric Moqtada Al Sadr and fought US and Iraqi government and other forces between 2004 and 2008. As part of a political overhaul aimed as casting Mr Al Sadr as a more nationalist and less sectarian figure, the cleric formed Saraya Al Salam in 2014. The group’s relations with Iran has been volatile.
Kataeb Hezbollah: The group, which is fighting on behalf of the Bashar Al Assad government in Syria, traces its origins to attacks on US forces in Iraq in 2004 and adopts a tough stance against Washington, calling the United States “the enemy of humanity”.
Asaeb Ahl Al Haq: An offshoot of the Mahdi Army active in Syria. Asaeb Ahl Al Haq’s leader Qais al Khazali was a student of Mr Al Moqtada’s late father Mohammed Sadeq Al Sadr, a prominent Shiite cleric who was killed during Saddam Hussein’s rule.
Harakat Hezbollah Al Nujaba: Formed in 2013 to fight alongside Mr Al Assad’s loyalists in Syria before joining the Hashd. The group is seen as among the most ideological and sectarian-driven Hashd militias in Syria and is the major recruiter of foreign fighters to Syria.
Saraya Al Khorasani: The ICRG formed Saraya Al Khorasani in the mid-1990s and the group is seen as the most ideologically attached to Iran among Tehran’s satellites in Iraq.
(Source: The Wilson Centre, the International Centre for the Study of Radicalisation)
Killing of Qassem Suleimani
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England World Cup squad
Eoin Morgan (capt), Moeen Ali, Jofra Archer, Jonny Bairstow, Jos Buttler (wkt), Tom Curran, Liam Dawson, Liam Plunkett, Adil Rashid, Joe Root, Jason Roy, Ben Stokes, James Vince, Chris Woakes, Mark Wood
Thank You for Banking with Us
Director: Laila Abbas
Starring: Yasmine Al Massri, Clara Khoury, Kamel El Basha, Ashraf Barhoum
Rating: 4/5
