The global crypto market valuation has fallen below $1 trillion for the first time since January 2021, as major cryptocurrency coins have experienced sustained losses. Kavan Choksi thinks it is no surprise that Bitcoin, the most valuable cryptocurrency by market capitalization, has plunged by almost 65 percent, plunging for nearly 12 weeks before showing signs of life.

The "crypto winter" appears to have arrived, with investors, analysts, regulators, and other industry participants worldwide cranking up concerns about the industry's icy winds.

The Gulf Region's Impact

According to Axiory, a worldwide brokerage firm, MENA investors are often more conservative in their approach to investing, insulating them from the current drop in crypto pricing.

"MENA investors are particularly sensitive to volatility and tend to question more about the instruments they are contemplating, especially when it comes to new assets and not in their preferred pool," said Axiory CEO Roberto d'Ambrosio.

Kavan Choksi thinks this risk appetite may have led to the world's crypto crisis, as investors went on a selling binge as inflation hit several economies worldwide.

Traditional stock markets, like the crypto market, have been impacted by excessive inflation, with the S&P500 and Nasdaq indices falling more than 20% since the start of the year.

Experts Say it Could Take Months for Bitcoin to Recover

Kavan Choksi believes better days appear to be a long way off for the crypto sector, which has had some of its worst months in recent months, with plunging digital currencies leading the charge.

Bitcoin, the world's most valuable digital currency, fell to roughly $21,000 on Wednesday morning, dropping more than half of its value since last year, when it reached $69,000. The decline is due to monetary policy tightening and high inflation rates in key economies worldwide.

Its power "is leaking down into cryptocurrencies through their effect on huge institutional investors," according to Alex Kuptsikevich, senior market analyst at FxPro, in an emailed statement to Arabian Business.

Ether, the second most traded digital coin, also suffered huge losses on Wednesday, trading over 12% lower than the day before. Ether has lost 57 percent of its value this year, trading at $1,066.86. Although some analysts remain positive about digital assets, it appears that another surge for the most popular digital coin will take some time.

"We believe Bitcoin is nearing its bottom, but the next bounce could take months." "The entire crypto sector will go through a furnace of fire over those months," Kuptsikevich predicted.

Middle Eastern Crypto Regulation

These market developments also ignite debates regarding cryptocurrencies' overall credibility, particularly in widespread adoption.

Emirates and Al Futtaim are two significant firms in the UAE that have accepted digital currencies as payment.

Another reason why industrial regulation is vital is to combat cyber threats effectively. According to a new Kaspersky research, approximately 200,000 phishing attacks targeting digital wallets used to store cryptocurrency occurred in the first quarter of 2022. Fraudsters would imitate cryptocurrency wallet websites to trick users into divulging personal security information.

According to the research, these assaults were discovered in several famous crypto wallets, including Binance, Coinbase, and eToro.

Individual education for crypto specialists to understand how to defend themselves from digital risks has received much attention, especially as bitcoin gains traction with transparent government and institutional support.

Dubai officials have been vocal about their efforts to prevent crypto fraud, particularly in properly regulating virtual assets in money laundering. The Dubai government established the Virtual Asset Regulatory Authority earlier this year to achieve this purpose.

Following the crypto crisis, Coinbase and Bahrain's Rain are cutting jobs and freezing hiring.

As the waves of the cryptocurrency market meltdown spread across the globe – with Bitcoin plummeting more than 50% to less than $33,000 and the global crypto market losing more than $2 trillion – crypto enterprises in the Middle East and around the world have begun to eliminate employment and put hiring on hold.