Kuwait’s Cautious Approach to Crypto Could Pay Massive Dividends
Kuwait’s Cautious Approach to Crypto Could Pay Massive Dividends
The latest downturn in the global cryptocurrency market has forced investors to reassess how they expose themselves, manage risk and view the long-term role of digital assets.
Consequently, a more complex and selective ecosystem is emerging – one where strategy is just as important as conviction.
The fragmentation of exposure has arguably been the most striking part of this shift, as investors are no longer simply ‘long Bitcoin’ and ‘long crypto’.
Investors must carefully choose between direct token ownership, spot exchange-traded funds (ETFs), derivatives, mining equities, treasury companies and other infrastructure plays.
Bitcoin Fall Hits Investors Hard
Bitcoin fell by around 30 percent from its October peak, which was destructive for companies whose valuations depend on leverage and relentless optimism.
Treasury firms that traded at massive premiums to their Bitcoin holdings were hit hard. What looked like a structural advantage turned out to be a bet on rising prices.
Investment strategist Lyn Alden believes the bubble was not in Bitcoin itself but the way investors were willing to overpay for indirect exposure to it.
Investors are becoming more disciplined about valuation, accepting that not every crypto-related asset rises and falls at the same time.
Crypto mining companies have also experienced this reality check firsthand. For a major part of the past year, miners have enjoyed the benefits of artificial intelligence (AI) and digital assets.
Companies that had cheap access to electricity positioned themselves up as future AI data centre operators, while still offering exposure to Bitcoin. This pushed Bitcoin prices even higher, but conditions suddenly changed.
Heavy debts, funding problems and the practical challenges of converting mining sites to data centres became serious problems.
Investors soon began to question whether these companies could make the transition without always needing to issue new shares and dilute existing investors.
That being said, the long-term plan remains the same. Data centres in the United States are expected to struggle with power shortages in the coming years, and crypto mining infrastructure has an essential role to play.
The key is not to shun crypto altogether but to better discern between financially strong companies with a future and those built on hype.
This new, cautious approach is also changing how crypto is viewed in markets such as Kuwait, which have not wholeheartedly welcomed cryptocurrencies.
Cautious Approach Could Benefit Kuwait
Kuwait’s lack of a formal crypto trading framework has not killed the ever-growing interest in blockchain technology, especially in areas such as gaming, payments and digital entertainment.
Regulators remain worried about speculative trading, but the technology is more useful than harmful, particularly in the iGaming sector.
Crypto payments are faster, and generally more transparent and secure. The supporting blockchain technology can be used to prove that the games are fair.
In Kuwait, where there is a hunger for digital entertainment despite strong societal apprehension towards gaming, blockchain technology enables players to participate.
As can be seen on the Kuwait online comparison website كازينوالكويت.com/en/, many betting sites which cater to Arab players facilitate crypto payments.
Given its popularity in this sector, it is little wonder that ‘real-world’ use of crypto is also increasing across numerous other areas. This is helping crypto become more resilient.
Major institutions, including sovereign wealth funds, have increased exposure through regulated products. They ignore the short-term price changes and view crypto as a financial asset. This has forced the market to be more thoughtful and active about management instead of being blindly enthusiastic.
Investments that avoid heavily indebted companies and protect against downside risk have held up better during market downturns.
The industry is learning from its past mistakes, using new approaches such as generating income through options instead of always issuing new shares. Banking on wild crypto price moves is now unfeasible. Investors must worry about how to manage the risks involved.
We are entering a new phase, one that has reset expectations. In this brave new world, excessive borrowing, inflated valuations and simplistic bets are being punished.
Strong infrastructure and even stronger balance sheets, and disciplined strategies are gaining respect. Whether it’s in global finance, the Gulf region or the iGaming sector, it is clear to see that the industry is becoming more mature.
This next chapter for crypto is far less speculative. This is a financial system gradually finding the perfect structure that rewards patience, selectivity and a clear understanding of what investors really want.
Chief editor of Side-Line – which basically means I spend my days wading through a relentless flood of press releases from labels, artists, DJs, and zealous correspondents. My job? Strip out the promo nonsense, verify what’s actually real, and decide which stories make the cut and which get tossed into the digital void. Outside the news filter bubble, I’m all in for quality sushi and helping raise funds for Ukraine’s ongoing fight against the modern-day axis of evil.
Since you’re here …
… we have a small favour to ask. More people are reading Side-Line Magazine than ever but advertising revenues across the media are falling fast. Unlike many news organisations, we haven’t put up a paywall – we want to keep our journalism as open as we can - and we refuse to add annoying advertising. So you can see why we need to ask for your help.
Side-Line’s independent journalism takes a lot of time, money and hard work to produce. But we do it because we want to push the artists we like and who are equally fighting to survive.
If everyone who reads our reporting, who likes it, helps fund it, our future would be much more secure. For as little as 5 US$, you can support Side-Line Magazine – and it only takes a minute. Thank you.
The donations are safely powered by Paypal.
