Investors in the UAE saw significant gains from their cryptocurrency investments in 2023, totaling $204 million, as reported by blockchain data company Chainalysis. This figure is part of a global trend where cryptocurrency investors worldwide achieved total gains of $37.6 billion last year.
While the 2023 gains are smaller compared to the $159.7 billion recorded during the 2021 bull market, they mark a substantial recovery from 2022, which saw estimated losses of $127.1 billion.
The UAE ranked second in the GCC for the absolute gains realized by investors, with Saudi Arabia leading at $351 million. Other GCC countries did not feature among Chainalysis’s top 50 countries globally in terms of realized gains.
Bitcoin was the preferred cryptocurrency for UAE investors, accounting for 70 percent of their total gains. Ethereum followed as the second most popular choice, contributing 24 percent of the total gains, while XRP, the native token of the Ripple network, accounted for 3 percent.
According to Kim Grauer, director of research at Chainalysis, this preference for Bitcoin and Ethereum demonstrates a level of maturity among UAE investors. They are choosing established digital assets with steady performance over more speculative cryptocurrencies, reflecting a trend where institutional investments play a significant role in crypto transactions in the UAE.
The recent surge in Bitcoin’s price, reaching a record high of over $72,100, has been driven by factors such as the UK’s financial services regulator opening doors for crypto asset-backed exchange-traded notes (cETNs) on the London Stock Exchange. Additionally, the approval of US-listed spot Bitcoin ETFs by the US Securities and Exchange Commission in January has also contributed to the bullish trend.
Looking ahead, the upcoming Bitcoin halving, where the reward for mining new Bitcoin blocks is halved, is expected to further impact the cryptocurrency’s value. With over 90 percent of Bitcoin’s total capped supply already in circulation, the halving is likely to increase Bitcoin’s scarcity value.
The positive trends in 2023 have continued into 2024, with cryptocurrencies like Bitcoin achieving all-time highs amidst increased institutional adoption. If these trends persist, the cryptocurrency market may see gains similar to those witnessed in 2021.
