Today’s cryptocurrency market meltdown is similar to when the dotcom bubble burst in 2000, according to Changpeng Zhao, chief executive of Binance, the world’s largest cryptocurrency exchange.
While some companies won’t survive the current “crypto winter", the underlying blockchain technology will endure, the cryptocurrency billionaire said during a pre-recorded video at DIFC FinTech Week, a two-day event for key FinTech players to discuss the future drivers of growth in financial services.
“Blockchain is a proven technology. Some cryptos may drop in price, some projects may fail but the technology will stay,” Mr Zhao said on Tuesday.
“This is similar to the dotcom bubble. Many companies failed but the technology stayed.”
Mr Zhao made his debut on the Bloomberg Billionaires Index in January with a net worth of $96 billion. However, his fortune has plummeted to $20bn after a massive sell-off in digital currencies across the board — from Bitcoin to Ether to Solana, Cardano and Shiba Inu, among others — and causing the sector’s total market capitalisation to fall below $1 trillion.
Bitcoin, the world's first and largest cryptocurrency, crashed below the key $20,000 psychological level last week as investors continued to steer clear of riskier assets amid concerns of rising interest rates as central banks try to rein in inflation.
The digital token has since pared back its losses and was trading at $21,018 as of 2.51pm UAE time on Tuesday, according to CoinMarketCap. However, it is down more than two thirds from its peak of about $68,000 last November.
Binance has been strengthening its ties in the Middle East and Europe after receiving in-principle approval from the Abu Dhabi Global Market in April to operate as a broker-dealer in virtual assets in the capital.
Founded in China in 2017, the company also secured a virtual asset licence to operate in Dubai and regulatory approval from the Central Bank of Bahrain in March to operate as a crypto-asset service provider in the kingdom.
“This is an industry with a lot of risks, so manage risks carefully, diversify and don’t chase high returns,” Mr Zhao said.
Blockchain is fundamentally a way to transfer value, similar to how the internet is used to transfer information, he said.
“The internet has revolutionised how we live, do business and blockchain will do that further. It will change the way we think about investments, fund-raising and financial transactions that is not possible using traditional financial methods,” Mr Zhao added.
Some solutions provided by decentralised finance (DeFi) today are not offered by traditional finance, such as global fund raising.
Entrepreneurs can raise between $10 million and $40m in a matter of a weeks or days using DeFi, Mr Zhao said.
“This is not possible in the traditional financial industry. It could take you several months to years to raise a similar amount from venture capital companies.”
Artists and content creators can now also monetise their work globally using non-fungible tokens, which could not be done so easily through traditional art galleries, Mr Zhao said.
DeFi can help to provide financial services to the unbanked population, he added.
“In five to 10 years, DeFi could become bigger than CeFi [centralised finance]. That is why we are making heavy investments in this area,” he said.
There are many innovations occurring in the DeFi and cryptocurrency space that will push the industry forward, he added.
“Failures are important in this industry because they allow you to learn and improve.”
Progressive and innovation-driven banks will adopt blockchain technology in a big way, while those that do not adapt will have a “very hard time” in the future and those late in adoption will be at a significant disadvantage, Mr Zhao said.
Forbes' list of world's 10 richest crypto billionaires — in pictures
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The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Brief scores:
Toss: Pakhtunkhwa Zalmi, chose to field
Environment Agency: 193-3 (20 ov)
Ikhlaq 76 not out, Khaliya 58, Ahsan 55
Pakhtunkhwa Zalmi: 194-2 (18.3 ov)
Afridi 95 not out, Sajid 55, Rizwan 36 not out
Result: Pakhtunkhwa won by 8 wickets
Herc's Adventures
Developer: Big Ape Productions
Publisher: LucasArts
Console: PlayStation 1 & 5, Sega Saturn
Rating: 4/5
Children who witnessed blood bath want to help others
Aged just 11, Khulood Al Najjar’s daughter, Nora, bravely attempted to fight off Philip Spence. Her finger was injured when she put her hand in between the claw hammer and her mother’s head.
As a vital witness, she was forced to relive the ordeal by police who needed to identify the attacker and ensure he was found guilty.
Now aged 16, Nora has decided she wants to dedicate her career to helping other victims of crime.
“It was very horrible for her. She saw her mum, dying, just next to her eyes. But now she just wants to go forward,” said Khulood, speaking about how her eldest daughter was dealing with the trauma of the incident five years ago. “She is saying, 'mama, I want to be a lawyer, I want to help people achieve justice'.”
Khulood’s youngest daughter, Fatima, was seven at the time of the attack and attempted to help paramedics responding to the incident.
“Now she wants to be a maxillofacial doctor,” Khulood said. “She said to me ‘it is because a maxillofacial doctor returned your face, mama’. Now she wants to help people see themselves in the mirror again.”
Khulood’s son, Saeed, was nine in 2014 and slept through the attack. While he did not witness the trauma, this made it more difficult for him to understand what had happened. He has ambitions to become an engineer.
If you go
The flights
Etihad and Emirates fly direct from the UAE to Chicago from Dh5,215 return including taxes.
The hotels
Recommended hotels include the Intercontinental Chicago Magnificent Mile, located in an iconic skyscraper complete with a 1929 Olympic-size swimming pool from US$299 (Dh1,100) per night including taxes, and the Omni Chicago Hotel, an excellent value downtown address with elegant art deco furnishings and an excellent in-house restaurant. Rooms from US$239 (Dh877) per night including taxes.
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
FIXTURES
All times UAE ( 4 GMT)
Friday
Saint-Etienne v Montpellier (10.45pm)
Saturday
Monaco v Caen (7pm)
Amiens v Bordeaux (10pm)
Angers v Toulouse (10pm)
Metz v Dijon (10pm)
Nantes v Guingamp (10pm)
Rennes v Lille (10pm)
Sunday
Nice v Strasbourg (5pm)
Troyes v Lyon (7pm)
Marseille v Paris Saint-Germain (11pm)
The%20specs
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Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
Score
Third Test, Day 2
New Zealand 274
Pakistan 139-3 (61 ov)
Pakistan trail by 135 runs with 7 wickets remaining in the innings
POSSIBLE ENGLAND EURO 2020 SQUAD
Goalkeepers: Jordan Pickford, Nick Pope, Dean Henderson.
Defenders: Trent Alexander-Arnold, Kieran Trippier, Joe Gomez, John Stones, Harry Maguire, Tyrone Mings, Ben Chilwell, Fabian Delph.
Midfielders: Declan Rice, Harry Winks, Jordan Henderson, Ross Barkley, Mason Mount, Alex Oxlade-Chamberlain.
Forwards: Harry Kane, Raheem Sterling, Marcus Rashford, Jadon Sancho, Tammy Abraham, Callum Hudson-Odoi.
WOMAN AND CHILD
Director: Saeed Roustaee
Starring: Parinaz Izadyar, Payman Maadi
Rating: 4/5
The Lowdown
Us
Director: Jordan Peele
Starring: Lupita Nyong'o, Winston Duke, Shahadi Wright Joseqph, Evan Alex and Elisabeth Moss
Rating: 4/5
