70 Percent Rise In Bitcoin In 70 Days, Record High At $72,274

The price of Bitcoin, the most famous cryptocurrency in the world, reached a new record level, surpassing the $71,000 barrier during Monday’s trading. This surge in demand comes amid optimism surrounding the US Federal Reserve’s decision to reduce interest rates this year.

The price of the unit in Monday’s transactions reached $71,632, marking a 3.2 percent increase in Asian markets, according to data from Bloomberg Financial News Agency. This signifies a surge of about 70 percent since the beginning of this year, encompassing 70 days. Furthermore, its price reached $72,274 in Tuesday’s transactions.

The rise was attributed to news that the Financial Conduct Authority in Britain announced it would allow the creation of securities linked to cryptocurrencies.

This follows the decision by US authorities earlier this year to approve exchange funds linked to the spot price of Bitcoin. This move convinced several large investors to take the risk of introducing units of them into their portfolios.

With the conclusion of international news, the focus now shifts locally: Have certain Kuwaitis finally gained entry into the realm of local wealth through the “Bitcoin” portal or its encrypted counterparts?

Double growth

Since its inception approximately 14 years ago, specifically in 2009, young Kuwaitis have been investing in cryptocurrency, experiencing double growth in their investments over an extended period.

Despite volatility, confidence in Bitcoin rises

Although Bitcoin experienced periods of significant gains and losses, some individuals’ belief in the future of this currency grew, leading them to retain it as an asset. This occurred despite the Central Bank of Kuwait not recognizing it and warning of its risks. Is there any legislation in Kuwait that criminalizes cryptocurrency?

Kuwaiti law prohibits the licensing of cryptocurrency trading companies, and the central bank and relevant authorities have long issued warnings about the dangers of promoting and investing in them to protect citizens from hidden costs, including exposure to fraud. However, the law does not specify any punishment for individuals if their trading is proven to involve this type of financial instrument.

While some Kuwaiti investors were affected by these warnings, others saw that they could take the risk by being careful in choosing a global broker, especially if they were experienced ones from Al-Ruba, in the hope of getting rich quickly. But what fuels their rush to invest in these high-risk assets?

Interest curve

With the shift from the downward curve to the upward trend of investment interest in cryptocurrencies, especially Bitcoin, it was logical to predict an increase in individuals’ demand for it, especially with the emergence of its star during the prolonged period of low bank interest rates approved globally and locally to counter the repercussions of the 2008 crisis, which persisted for many years due to the 2020 pandemic.

In the midst of this, several platforms became active on social media, promoting the creation of investment portfolios in Bitcoin and other cryptocurrencies, dividing the investor’s capital into segments. This has motivated some small capital owners to invest since its inception.

Here, it may be useful to refer to an eyewitness who reported to Al-Rai newspaper that he knew of Kuwaitis who borrowed to invest in Bitcoin. Some of them were content to allocate a portion of their loan to purchasing digital currencies, hoping to pay off their debts with a significant profit margin, driven by the exceptional returns achieved by those who had gone before them on this path.

He continued, “Some people suffered significant losses in their investments, especially those who bought when the unit price was $20,000 and sold in a panic when it dropped to $2,000. However, they could have made a profit if they hadn’t sold their units during the downward trend, allowing their invested capital to grow later.”

In practice, legal restrictions on digital currency trading companies in Kuwait, which included the Ministry of Commerce and Industry forming inspection teams with judicial powers in 2018 to monitor their activities, including some external ones represented by official offices within the country, did not significantly combat digital currency trading.

The market value of Bitcoin exceeded the one trillion dollar mark for the first time since November 2021, representing approximately 50 percent of the total cryptocurrencies in circulation. It also accounted for about 61.3 percent of the total market gains during 2023.

Perhaps the question regarding the 1.54 million Kuwaitis (the number of citizens) in this context relates to how cryptocurrency investors respond to inquiries from banks, the Financial Investigation Unit, and regulatory authorities regarding the source of their exceptional flows. Where did these funds originate?

Practical experiences in this regard point in two directions. Firstly, when the transaction value is directly transferred to the investor’s local account, the typical response is "sell a cryptocurrency.”

These individuals often lack professionalism and simply display the serial number from the digital platform for unit purchase, typically between 24 to 36 alphanumeric characters, as evidence. Banks typically accept this information. If unavailable, the individual’s file is referred to the Financial Investigation Unit.

Professionals often opt to open offshore accounts in well-known banks in countries like Britain, Bahrain, and the Emirates. This allows them to bypass the stringent scrutiny of Kuwaiti banks regarding the source of funds. Transfers from these offshore accounts to local ones are less scrutinized since they originate from internationally recognized banking entities. If pressed, they typically respond with the canned answer “selling cryptocurrency.”

Systems development

Several factors have reignited Kuwaitis’ interest in cryptocurrency trading. Among these, the proliferation and enhancement of legal money transfer systems, notably the “Blockchain” service for cross-border financial transfers, stands out.

Several prominent Kuwaiti banks have embraced this service, fostering individual investment activity in cryptocurrencies and nurturing ambitions for expansion.

Additionally, trading through licensed digital currency exchanges in neighboring countries offers an avenue to circumvent Kuwaiti restrictions.

It’s important to note that the reliability of cryptocurrency trading companies worldwide isn’t guaranteed. Some companies aim to defraud customers, while others offer subpar services and lack adequate measures to protect deposited funds, exposing traders to various risks.

Kuwaitis have expanded their cryptocurrency investment beyond direct unit purchases to include local mining. This activity allows some to earn valuable currency rewards without buying anything, while benefiting from Kuwait’s low production costs due to affordable electricity tariffs, as the country is among the top five cheapest for mining cryptocurrencies.

In this regard, it is reported that some individuals have been setting up mining networks in abandoned or uninhabited homes, and occasionally on farms, even if only seasonally. They connect their network to multiple houses to avoid drawing attention to the Ministry of Electricity due to the high consumption required by cryptocurrency mining.

Kuwaiti graduate secures 13 Bitcoins for $1,300, preserved for retirement

A young Kuwaiti man, currently serving as a director in a ministry, shared his Bitcoin investment journey with Al-Rai. He recounted that upon completing his university education in Britain in 2011 and returning to Kuwait, he retained a cash balance of $1,300 from his expenses.

Despite the risks associated with investment and the potential loss of this amount (equivalent to about 400 dinars), he opted to invest in it by purchasing 13 units of Bitcoin, priced at $100 each at the time. He relied on his intuition regarding the promising future of this currency.

He further mentioned that he never incurred losses on any of the units he purchased, even during periods of severe fluctuations. He continues to hold onto all of them, indicating his strong faith in this currency. He classified it as a savings option with two potential outcomes: either reaching the $100,000 barrier or facilitating his early retirement.

21 million bitcoins globally

The first block of Bitcoin was mined on January 9, 2009, out of a total of 21 million units that were launched as a decentralized cryptocurrency based on cryptography.

On May 22, 2010, Laszlo Hanicz made the first real-world transaction by purchasing two pizzas in Jacksonville, Florida, for 10,000 bitcoins. Within five days, its price rose by 1000%, increasing from $0.008 to $0.08. Following Bitcoin, Ethereum emerged as the second most significant digital currency in the world.

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