UAE: More residents are opting for crypto savings over cash deposits; here's why

Cryptocurrencies are increasingly becoming a part of the UAE residents’ savings as investors and consumers are holding them on a long-term basis.

Some of the cryptocurrency holders in the UAE have seen the value of their assets grow exponentially. Cryptos gained currency and rallied earlier this month when the US Securities and Exchange Commission approved the first-ever Bitcoin ETFs to trade in the US. Cryptos are highly volatile but it is slowly and steadily getting support from institutions, investors and governments. But it will still take quite some time before they get widely accepted.

Though deposit rates have also gone up in the wake of interest rate hikes over the past couple of years, UAE consumers still believe that cryptos can give them higher returns, if invested wisely and with calculated risks.

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UAE resident Aicha Fadhel, a mother and a PhD student, has been investing in cryptos for two years, drawn for its financial growth and innovative nature of blockchain technology.

While acknowledging the volatility, she said she always took a strategic approach to managing risks.

“I have invested more than $2,000 in cryptos as part of my savings strategy. The value of my crypto savings has experienced fluctuations due to market dynamics. Overall, I have witnessed both growth and temporary declines. However, I remain focused on the long-term potential of my investments,” said Fadhel.

Abobakr Magdy, also a Dubai resident, started with just Dh1,000 with a portfolio of multiple coins like ETH and Bitcoin and some other promising coins like ADA and BNB. “Once I got familiar with the trends and platforms, I increased my investment to Dh10,000,” he said.

Magdy prefers to have cryptocurrencies as savings over cash deposits and other options due to higher returns.

In order to deal with the volatility in this new investment avenue, he sets up alerts on most platforms to minimise his losses and, instead, leverage this volatility to his advantage and gains.

In the US, cryptos accounted for 17 per cent of residents’ savings, emerging as the second most popular.

Harmesh Johal, who has been investing since 2017 on both short and long-term basis, is attracted by robust returns coupled with the absence of restricted trading hours or lock-in periods.

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He hoped that with the increasing mainstream acceptance, regulation, and global adoption of cryptocurrencies, the market would see a gradual reduction in volatility.

Johal allocates around 10-20 per cent of his savings across a diversified portfolio of cryptocurrencies.