Better days seem to be out of sight for the crypto world, which has witnessed some of its worst in recent months – with the turmoil notably led by tumbling digital currencies.
Bitcoin, the world’s largest digital currency in market value, has plunged to around $21,000 on Wednesday morning – losing more than half of its value since November last year, when it traded up to $69,000.
The downfall happens on the back of tightening monetary policy, as well as high inflation rates in major economies around the world.
Its weight “on financial markets and are trickling down into cryptocurrencies through their influence on large institutional investors,” Alex Kuptsikevich, FxPro senior market analyst, told Arabian Business in an emailed statement.
The second most traded digital coin, Ether, also registered significantly dismal losses on Wednesday, trading almost 12 percent lower than the previous day. At $1,066.86, Ether lost 57 percent of its value year-to-date.
Recent developments in the digital currency scene are also playing a major role in this collapse. In mid-May of this year, stablecoin terraUSD and its native coin Luna lost all of its value, causing a major meltdown in the industry. Media reports estimated the scandal cost $500 billion in losses.
Although some analysts remain optimistic about digital assets, it looks like it will take time for another rally for the most popular digital coin.
“We believe Bitcoin may be close to its bottom, but it could take months until the next rally. During those months, the entire crypto industry will probably go through a furnace of fire,” Kuptsikevich said.
Crypto regulation in the Middle East
These market news are also sparking conversations about the general credibility of cryptocurrencies, especially when it comes to mainstream adoption.
In the UAE, a few major companies have recognised digital currencies as a mode of payment, including Emirates and Al Futtaim.
“Regulation is necessary and the UAE is one of the fastest countries in the world in terms of moving towards regulation,” Dubai-based crypto expert Jamil Abuwardeh told Arabian Business, noting mainstream adoption could slow down given the recent industry movements.
Another reason why regulation is important in the industry is to better crackdown on cyber threats. In a recent report by Kaspersky, data showed there were nearly 200,000 phishing attacks specifically against digital wallets used to store crypto coins in the first quarter of 2022. Fraudsters would mimic crypto wallets’ websites and lure victims to enter personal security information.
These attacks were observed in many popular crypto wallets, including Binance, one of the biggest in the world in number of users, Coinbase, and eToro, the report showed.
“Phishing crypto scams deserve special attention – because they’re based on social engineering, these attacks do not require any advanced technical skills to be launched and work well for the fraudsters. They are often successful due to a user’s inattention and lack of awareness,” Alexey Marchenko, head of content filtering methods research at Kaspersky, said.
Much emphasis has been put on individual education for crypto enthusiasts to learn how to protect themselves from digital threats, especially as cryptocurrency gains more traction with apparent government and institutional backing.
Dubai authorities have actively been announcing efforts to combat crypto fraud, specifically in ensuring better regulation of virtual assets in relation to money laundering. Earlier this year, the Dubai government set up the Virtual Asset Regulatory Authority to deliver on this goal.
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