The Middle East is vital in developing blockchain technology to improve financial, government and business systems. These countries use blockchain in tasks such as registering documents or facilitating banking transactions. In recent years, digital currencies have become vital and attractive topics in the Middle East. Digital currencies aren’t only a financial innovation and a device for buying and selling; Cryptocurrencies have also been influential on a social, cultural and even political level. Notwithstanding the small length of the crypto marketplace compared to many monetary markets, the impact of virtual currencies on the whole international economic system is more significant than you may think. In the following, we will examine digital currency technology and the factors influencing cryptocurrency volatility amid Middle East events.
Cryptocurrencies History
The primary turning point in the history of virtual currencies came about in 2008. An unknown individual named Satoshi Nakamoto created something called Bitcoin. This white paper introduced the idea of a new virtual currency known as Bitcoin.
Differences between ordinary money and digital currency
Conventional money and digital currencies are used to buy goods and services. Both cases have many similarities. However, new features of digital currencies have caused this category of currencies to have distinctive differences. Reducing costs in money transfer is another goal of creating digital currencies.
How can you make a cryptocurrency transaction?
Using a virtual foreign money pocket, you may create a transaction that includes information about the sender’s address, the recipient’s pocket code, and the amount of bitcoins dispatched.
Transaction broadcast
The transaction is sent to the peer-to-peer network of the desired virtual currency. In this way, the network includes tens of millions of computer systems worldwide.
Transaction confirmation
In this step, miners receive the transaction. The use of computer processing strength to remedy a complex cryptographic equation and fix this equation verifies the authenticity of the transaction.
Finalization of the transaction
As a result of solving the equation, the miner can identify the transaction as legitimate and add it to the blockchain. Each block contains a list of transactions and data related to the preceding block.
The situation of digital currencies in the Middle East
The Middle East is vital in developing blockchain technology to improve financial, government and business systems. These countries use blockchain in tasks such as registering documents or facilitating banking transactions.
Digital currencies have become vital and attractive topics in the Middle East in recent years. Countries like the United Arab Emirates, Saudi Arabia, Turkey, and Iran use cryptocurrencies in various fields.
In the minds of economic experts, there is no doubt about the potential of these cryptocurrencies. Digital currencies can solve the world’s financial and economic problems and remain in our lives. Some critical events in 2018 drew global attention to the development of cryptocurrency in the Middle East.
One of the occasions on this listing is the creation of the UAE Blockchain approach in the United Arab Emirates in April 2018. The event’s highlight was revealing the government’s intention to transfer 50% of transactions to its blockchain gadget. Additionally, Bahrain, a small island country within the Arabian Peninsula, has created a checking out environment for cryptocurrencies, in which colossal research is performed on exchanges and brokers. Another massive task inside the cryptocurrency industry is the declaration of the possible issuance of a central authority-sponsored virtual foreign money through the imperative financial institution of Egypt.
Laws and how to monitor digital currencies in the Middle East
The industry has reached a critical point. In the early days of digital currencies in the Middle East, trust in the technology was low. Several years passed, and a trend occurred that caught most ignorant people. Some were fooled by the false advertising of the world of cryptocurrencies and entered this market without enough information.
Economic experts are confident in the potential of these cryptocurrencies. For instance, digital currencies can provide solutions to the world’s financial and economic problems and remain in our lives. Some critical events in 2018 drew global attention to the Middle East regarding cryptocurrency development.
Many countries in the Middle East have already introduced official laws to prevent corruption in digital currencies. These laws have been beneficial so far, reducing the rate of abuses and money laundering common in the financial markets.
Most important adopters of digital currencies
The Middle East and Africa were named the most critical adopters of digital currencies in 2022. Customers within the Middle East and North Africa have acquired $566 billion in digital foreign money, 48% more than in the preceding 12 months. Türkiye and Egypt have been some of the biggest adopters of cryptocurrencies.
The Gulf Cooperation Council nations are rapidly rising as critical players in the virtual foreign money marketplace. Saudi Arabia is the 0.33 biggest virtual foreign money market in the entire Middle East and North Africa, and the United Arab Emirates is the fifth biggest virtual foreign money market.
Cryptocurrency volatility amid Middle East events
There are many examples that illustrated the Middle East events impacts on the cryptocurrency volatility. For instance, tensions following Ismail Haniyeh’s assassination have impacted cryptocurrency prices. Cryptocurrency volatility amid Middle East events caused the price of Bitcoin fall by more than 5% and reach $61,000. Additionally, volatility caused almost $250 million of trading positions to be liquidated as traders hoped for a price increase.
The reason for the decrease in Bitcoin price and the increase in Tether price
The dropping of Bitcoin prices and the rise of the Tether price are sometimes related to economic, market psychology, and geopolitical factors. Cryptocurrency volatility amid Middle East events is due to that fact that political and military tensions and crises lead to growing uncertainty in global monetary markets. Furthermore, the rate of oil and different simple commodities could increase. Faced with those uncertainties, investors generally transport their funds to safer belongings, gold, and the US dollar. Similarly, the increase in oil expenses increases manufacturing and transportation fees globally.
Political effects and sanctions
Financial and economic sanctions usually accompany geopolitical tensions. These sanctions can have direct and indirect effects on the Bitcoin market. At the same time, the price of local currencies may fluctuate, so such tensions can change the direction of the digital currency market (even positively) through the increase of uncertainty, change in investors’ behaviours, impact on public trust, economic and inflationary changes.
Volatility of cryptocurrencies due to geopolitical factors
The cryptocurrency volatility amid Middle East events may lead to pressures similar to those of traditional markets. If the Middle East conflict broadens, cryptocurrencies could face various ramifications.
Institutional investors may sometimes decide to liquidate positions to rebalance their portfolios into safer assets based on geopolitical risks. However, others may see the crisis as an opportunity to acquire undervalued digital holdings in anticipation of a rebound.
Optimal investment in crises in Bitcoin
Accurate market analysis and assessment
Analyzing historical data on past cryptocurrency volatility amid Middle East events can help investors identify possible patterns. Following news and world events is also helpful for success in investing during crises.
Developing risk management strategies
Diversifying the portfolio is one of the exceptional chance management techniques. Spinoff monetary instruments, which include future contracts, can also help you control your risks.
Trading strategies during crises
Stepwise funding (dollar-cost Averaging) is a powerful strategy to reduce the hazard of cryptocurrency volatility amid Middle East events. In this method of purchasing Bitcoins abruptly, the investor buys Bitcoins progressively at specific periods and with fixed quantities.
