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UAE crypto investors realised estimated gains of $200 million in 2023

Bitcoin remains the cryptocurrency of choice for UAE investors

Investors in the UAE realised capital gains totalling $204 million from their crypto investments last year, data shows.

2023 proved to be a year of strong recovery for global crypto markets with asset prices and market sentiment rebounding positively after the turmoil of the previous year. In its analysis of on-chain activity, Chainalysis, the blockchain data company, has been able to estimate that the global crypto investor community achieved total gains of $37.6 billion in 2023. While this total is much smaller than the $159.7 billion in gains made during the 2021 bull market, it represents a significant recovery from 2022, which saw estimated losses of $127.1 billion.

With the crypto community in Saudi Arabia cashing out gains of $351 million, the UAE placed second in the GCC in terms of absolute gains realised by crypto investors.

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, delivering 24 per cent of the gains that the country’s investors realised. Interestingly, XRP, the native token of the Ripple network, which placed third accounted for only 3 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 6th, 20th, 25th, and 49th respectively on the global top 50 list. “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.”