The crypto market boomed in 2021, with users experiencing gains of $159.7billion. However, a year later this number plummeted with losses in the range of $127.1billion. According to research from Chainalysis, the blockchain data company, the global crypto investor community has been able to recover as it made gains of $37.6billion.
Investors in the UAE were no exception to the positive trend, realising capital gains totalling $204million from their crypto investments. With the crypto community in Saudi Arabia cashing out gains of $351million, the UAE placed second in the GCC in terms of absolute gains realised by crypto investors. None of the other GCC countries placed among Chainalysis’ list of top 50 countries globally.
Diving deeper with its analysis, Chainalysis was able to identify Bitcoin (BTC) as the cryptocurrency of choice for UAE investors. This asset class delivered strong results for UAE investors, accounting for 70 per cent of the total gains they made last year.
Unsurprisingly, Ethereum (ETH) proved to be the second most popular cryptocurrency for UAE investors. It delivered 24 per cent of the gains that the country’s investors realised. XRP, the native token of the Ripple network, which placed third accounted for only three per cent of the gains on UAE investors’ deposits through 2023.
“The outsized popularity of Bitcoin and Ethereum indicates a level of maturity among UAE investors. The community is clearly backing well established digital assets with steady and proven performance, rather than backing more speculative cryptocurrencies. This isn’t surprising given that we have also observed that Institutional investments by and large account for the greatest proportion of crypto transactions in the UAE,” explained Kim Grauer, director of research, Chainalysis.
Interestingly, crypto investors in India, the Philippines, Pakistan, and Bangladesh collectively realised gains of $2.07, placing sixth, twentyth, twenty-fifth, and forty-ninth respectively on the global top 50 list.
Appetite for digital assets
“The fact that these countries — the citizens of which together account for over 60 per cent of the UAE’s population demographic — have placed among our top 50 ranking bodes especially well for the further development of the UAE’s crypto community. The strong appetite for digital assets in these nations, which will likely be strengthened by positive market performance, means greater potential for crypto-facilitated cross-border transactions — something the UAE government has demonstrated its eagerness to pioneer,” said Grauer.
Commenting on the global crypto market outlook for 2024, Grauer said: “While past performance shouldn’t be taken as indication of potential future outcomes, the outlook is encouraging. So far, the positive trends of 2023 have carried over into 2024, with notable crypto assets like Bitcoin achieving all-time highs in the wake of Bitcoin ETF approvals and increased institutional adoption. If these trends continue, we may see gains more in line with those we saw in 2021.”
