EXNESS

WAEL MAKAREM

Senior Market Strategist - MENA Region

Q What do you think the future holds for Bitcoin and cryptocurrencies in general? Will they ever reach new heights?

Crypto is a new and exciting market. Especially after the bull run of 2020-2021, many traders and investors shifted part of their attention and portfolios towards crypto. Looking at its technology, the king of crypto has already reached 90% of its maximum supply which means that it has become more scarce and, granted that its demand is high, its price could be rising too. Given the fact that bitcoin’s movement affects the overall sentiment of the crypto market, this could potentially have a great impact on the rest of the crypto market.

On the other hand, the crypto market is still in its infancy, and it’s evolving on many fronts, including regulation. The market doesn’t have much history and data to base predictions on. The reality is no one can foresee the future of crypto with certainty. Mass adoption has begun but it still has a long way to go. A broader institutional consideration needs to take place in order for the landscape to evolve. Sure, the interest of large and forward-thinking corporations as well as financial institutions is very encouraging, but it is still not enough. And, if you see their stance on crypto, you may see a bit of hesitation. Tesla is a prime example that lately liquidated 75% of its Bitcoin.

Regulation is also vital for the advancement of the market. There isn’t a real threat that cryptos will be banned forever, at least if you see the policymakers’ stance in the West; President Joe Biden signed an executive order on digital assets which initiated the US Treasury’s fact sheet on International Crypto Regulation published in July. The EU is also working on its own regulatory framework as well as Central Bank Digital Currency.

While some traders, especially crypto enthusiasts (the HODLers) think that regulation won’t be good for the market, financial experts beg to differ. Clear, not strict, regulation can pave the way for more adoption. And let’s not forget that concrete regulation can contribute to investor confidence and sentiment. Which is always a positive sign.

Lastly, one major consideration is the current inflation and how the measures taken by the policymakers are affecting and will affect this asset class. The Federal Reserve, for example, is raising interest rates significantly, a move that runs the risk of a recession even-though now we are at pre-financial crisis levels. Yet, we don’t know for certain how the markets will react to the unstable financial conditions of the global economy and whether traders will turn to cryptocurrencies.

Q What’s your take on the formation of Central Bank Digital Currencies? Will this be the end of the crypto trend and era?

CFBDC is where the future is heading. Governments around the world are taking all the necessary steps to transform their economies with a digital currency, tied to their fiat equivalent. Having a CBDC won’t necessarily negatively affect the crypto landscape, it will potentially establish it. After all, we are talking about authorities and regulators we know and trust.

Essentially this could help crypto adoption on a larger scale. User confidence will rise and investor sentiment will be positive. And this could help strengthen the dominance of crypto and digital currencies altogether.

The bigger question is how the decentralized nature of crypto fits in with the centralized philosophy of governmental entities like a Central Bank. And that remains to be seen.

Q Talking about adoption, Tesla cited Bitcoin’s environmental footprint as the reason for backing down from its commitment to fully adopt it. What’s your take on that? Will this be enough to turn people towards more environmentally friendly cryptocurrencies like Ethereum?

Bitcoin is the king of crypto, undoubtedly. It has the power to control the volatility of the entire market. Yes, there has been tremendous volatility caused by Bitcoin mining farms closing and moving but it is questionable whether that’s enough to impact its dominance negatively.

Then you have Ethereum which, one could argue, is the king of altcoins. With its new proof of stakes technology/Ethereum 2.0 which was unveiled last month, it has the potential to expand its reach and dominance. Plus, its founder and CEO, Vitalik Buterin, is a very influential figure in the crypto community. Whether that’s enough to overturn Bitcoin is a whole different matter and it is not something that we will possibly have to worry about in the short to medium future.

Bitcoin has a huge market cap and there are no signs signifying any power allocation in the crypto sphere. Other coins gaining impact in the eyes of traders are Ethereum, Ripple and Dogecoin, which after Elon Musk’s support

have managed to gain a lot of traction and make a few millionaires along the way. Should investors turn away from Bitcoin and look at other coins? They definitely could. There are some pretty interesting and innovative cryptos out there, like Cardano, Solana, and even Ripple. But Bitcoin still has the power to move the entire crypto market and it is the crypto that attracts the biggest interest, so far.

Q The Crypto market is a very volatile market. Is there a strategy that traders/investors can use to handle its steep ups and downs?

It’s definitely not for the faint hearted. Bitcoin loses and gains 20-30% of its value within weeks, days even. And it’s the same, and sometimes even worse, for every crypto asset - the investors of Terra Luna, for example, lost their investments after the stable crashed back in May 2022. As I mentioned before, there isn’t enough history or data to base forecasting on. So the strategies vary according to each person’s risk appetite.

Financial experts and market strategists always advise investing only 2-5% of your portfolio in crypto and never investing more than one can afford to lose. Caution and discipline should always be practiced, and emotions should not rule.

In terms of strategy, there is no one-size-fits-all approach here. It depends on the experience and risk appetite of each trader. Some choose long-term investment, others position shuffling. Either way, investors should always be up-to-date with the news (and tweets) and also take a good look at the technical analysis of each asset, especially Bitcoin.

Q Exness has a substantial range of crypto CFDs. Why should anyone choose to trade CFDs?

Yes, Exness offers the most popular crypto assets available for CFD trading. With CFDs, the trader deals directly with the broker and there are no middlemen involved. This is advantageous in a number of ways. For one, the execution of their positions is much faster - at Exness we strive to execute every trade instantaneously with as close to zero delays as possible. We also utilize advanced algorithms that allow us to predict fluctuations and therefore offer stable, ultra-low spreads and no slippage.

Exness is at its core science-driven, which means that it offers a number of features that are there to protect our clients’ interests. One of those is negative balance protection which is there to ensure that no amount will be accounted for in case the client’s balance goes negative. Plus, with CFDs, traders can take advantage of any direction cryptos are taking which, considering the market’s volatility and unpredictable fluctuations can be very useful.

It is worth noting that Exness is one of the largest brokers in the world and has consistently exceeded the $2 trillion mark in monthly trading volume for the past few months. This is indicative of our superiority in terms of reliability and conditions. Our promise to all our clients is that we will provide a frictionless experience on all fronts, whether it be our trading conditions or our support.