The Practical Islamic Finance Podcast

Qatar Could Make History in a Big Way

March 09, 2024 Rakaan Kayali
The Practical Islamic Finance Podcast
Qatar Could Make History in a Big Way
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Qatar Could Make History in a Big Way

Podcast Episode Description:

In this episode, titled "Qatar Could Make History in a Big Way" we delve into Bitcoin's recent surge to new heights, fueled by factors like ETF adoption and institutional interest. We explore Qatar's potential entry into Bitcoin investment through its sovereign wealth fund, discussing the implications for the crypto market.

We analyze Bitcoin's supply-demand dynamics, its evolving role as a hedge asset, and its superior risk-adjusted returns compared to traditional assets. Additionally, we caution against blind speculation in altcoins, emphasizing the importance of research and community engagement.

Time Stamps:

  • (0:00) Introduction and greeting
  • (0:08) Discussion on Bitcoin reaching another all-time high
  • (0:39) Overview of Bitcoin ETFs and supply crunch
  • (2:07) Volume of trading in Bitcoin ETFs
  • (2:58) Bitcoin as a hedge and similarities with gold
  • (4:25) Potential market cap of Bitcoin compared to gold
  • (5:12) Considerations for investing in Bitcoin
  • (7:29) Discussion on Qatar's Sovereign Wealth Fund Considering Bitcoin
  • (9:54) FOMO spreading to other cryptocurrencies
  • (10:33) Caution against investing in altcoins blindly
  • (11:21) Importance of research in selecting altcoins
  • (12:01) Importance of joining a community like PIF for research
  • (14:11) Taking questions from viewers
  • (14:35) Discussion on Coinbase and diversification
  • (15:31) Caution against clicking on suspicious links
  • (17:18) Strategy for investing in smaller cap altcoins and Bitcoin
  • (18:11) Discussion on the halal nature of crypto staking
  • (23:09) Conclusion 

Our podcast is about helping people ethically build wealth. We cover a broad range of topics including stock and crypto investing, product reviews, and general financial well-being.
Anything you hear in this video is an opinion. It is not personalized financial advice. Make sure you do your due diligence before making any investment decisions.

As-salamu alaykum everyone, I hope you are doing well. Wow, what an exciting day it was. Bitcoin reached another all-time high. I suspect I'm going to say this sentence many more times in the near future. And the fundamental support, on my assessment at least, the fundamental support and additional move upwards, even before the halving, which historically, during this time, we've been way below our all-time high. But with the Bitcoin ETFs, this has all changed. So let's look at the fundamentals and what they're telling us and some of the recent happenings and why I'm really optimistic that Qatar could make history in a big way soon. So without further ado, let's get started. Not financial advice. Be sure to do your own due diligence before making any investing decisions. So the Bitcoin ETFs continue to hoover up all of the new supply of Bitcoin and then some. And when I say and then some, I'm talking a day like yesterday, for example. We had close to eight times more inflows into these new Bitcoin ETFs than we had new supply of Bitcoin. And you can just imagine after the halving, this ratio with the same net inflows into the Bitcoin ETFs, this ratio would have been closer to 15. So there's definitely a supply crunch happening and demand for Bitcoin is only increasing the more its price goes up, because the more its price goes up, the more proof there is that the utility of this token is what it is advertised to be. Not only that, but this week we saw the volume of trading in the Bitcoin ETFs smash really all records. Last week we set an all time high record for volume for these Bitcoin ETFs and this week we smashed last week's record. So this typically corresponds with more net inflows when volume is going up, when trading volume is going up. We've seen this correspond with higher and higher net inflows into these Bitcoin ETFs. So this is very bullish. Not only that, but Bitcoin is displaying more proof that it can actually function as a hedge for people's investments and a way to reduce the amount of risk that they have in their portfolios. So we saw this week Bitcoin mimicked the performance or the reaching of an all time high. Bitcoin and gold reached new all time highs at the same time. So we're seeing a similarity in behavior for perhaps the first time since its inception. Coin is now no longer looked at by many as a risk on asset, but rather as a hedge. And you can see this apparent in the similarities and movements between gold and the new digital gold, which is Bitcoin. And speaking of gold, we saw the market cap of gold exceed $16 trillion and one can only imagine that with Bitcoin now only at $1 trillion, how much upside there is still left in Bitcoin's market cap. I mean, if we accept that Bitcoin is actually a superior form of gold so it can be divided more easily, sent more easily, transaction fees are less, it can be traded more easily. If it's a superior form of digital gold, of gold, it is in fact digital gold, then there's no reason why the market cap of Bitcoin cannot exceed the market cap of gold. And even if you were to assume, OK, both assets were to reach the same market cap over time, then we still have at least an 8x left in Bitcoin. So we're not saying that we're going to achieve this 8x in the next 12 months, but there's clearly an argument for why Bitcoin could reach that high. So for all the people asking, is it too late? Is it worth it to still buy Bitcoin? Well, it depends on your time horizon. If you're trying to figure out if you should buy it for the next month to flip it, then probably you should, but it's less sure. It's a less sure thing. But if you're saving for the future, let's say you want to save for your retirement, which is five years or 10 years or 20 years into the future, then there's a very solid argument for adding Bitcoin to your investment portfolio, despite the fact that it reached an all time high today. And I will point you to additional supportive data related to this, which is that Bitcoin's return since the beginning of this year didn't just exceed other major asset classes. But also, if you look at the risk adjusted return, which is what most financial advisors will look at when assessing an asset, even if you look at return per unit of volatility, Bitcoin beat out all the other major asset classes. So really, I mean, investors, individual investors are feeling FOMO towards Bitcoin and a lot of them are adding them. But also asset managers are feeling that they no longer have an excuse not to be allocating part of their clients' portfolios to Bitcoin, especially now that Bitcoin has received the imprimatur of big firms, professional firms like BlackRock and Fidelity. So asset managers, financial advisors, when they see Bitcoin having the best risk adjusted return, they're under pressure now to allocate more of their clients' portfolios to this asset, which is bullish for Bitcoin, obviously. Now, something that was very bullish for Bitcoin and for me that gave me great hope was the recent talk about Qatar and their sovereign wealth fund perhaps considering Bitcoin as an investment. So as allocating some of their assets under management for their sovereign wealth fund to Bitcoin. Now, you may be saying, well, Qatar is a small country, but keep in mind they are very rich. Their sovereign wealth fund is actually $500 billion. If you think that the BlackRock ETF, the bit that BlackRock has, has around $10 billion in assets under management, only a 2% allocation of the Qatar sovereign wealth fund to Bitcoin would be another BlackRock ETF. So this would be huge for Bitcoin. It will also be huge for Qatar, I think. And I'm optimistic that out of all the Muslim countries, I think Qatar has proved itself to be quite forward thinking and quite independent. And I think that if anyone was going to do it, it may be Qatar. And it's a way for Qatar not only to do good by its citizens and preserve their wealth, it's also a way for Qatar to preserve its independence and perhaps show the rest of the how to do exactly this by removing their dependence on currencies that belong to nations that perhaps or countries that perhaps don't have their best interests at heart. So allocating, I hope this becomes a trend. If Qatar allocates some of the sovereign wealth fund to Bitcoin, I hope it becomes a trend in the Ummah where more and more countries allocate some of their sovereign wealth fund assets to Bitcoin and they can get some independence out of that. Now, FOMO is setting in in a big way, not just as it relates to Bitcoin, but as we've seen in previous cycles, this FOMO is spreading to other cryptocurrencies. And so crypto exchange daily volume yesterday rose to 100 billion for the first time since 2021. And I just want to caution people against writing sort of the next hot token. And I will refer you to this graphic, which shows that out of the top 200 coins, only 39 of them have outperformed Bitcoin. So if you are going to dabble into altcoins, chances are you won't do as well as you would have if you just bought Bitcoin and held it. There are some massive gains to be had in altcoins, I believe. And that's why, you know, I hold altcoins in DPIF crypto portfolio. However, if you don't know what you're doing and you're kind of just going off of hype, you're basically following where momentum is, you could get burned in a very big way. So if you want just the least effort, the approach with the least effort and the highest probability of success, then you should just buy Bitcoin and be done with it. However, if you are interested in additional gains beyond just what Bitcoin offers, the type of gains that could get you, you know, five or 10x, then I think it's really important to spend time to actually familiarize yourself with, you know, what makes a good altcoin, things like the tokenomics of the altcoin and the utility of the altcoin and when the unlocks are going to happen and who is actually working on this project and doesn't have attraction. And one of the ways to help you with this research is to join a community such as PIF and share ideas there. And I would highly encourage you to do that. I think, you know, if you compare the money that you could save or you could earn versus the cost of membership, I think it's quite worth it. Another way to do this is to keep following channels like this one and seeing what the people who are dedicating themselves to following these altcoins are actually saying. And that's another way. But I just want to caution you against, you know, following the latest trend because, you know, I've seen these cycles before and I've seen people get burned in a big way and you don't want to be one of them. And really, when you get into a cryptocurrency and it works out and you 5 or 10x your investment, typically what happens is that people don't sell and just walk away. If they're lucky enough to sell and, you know, book those profits, what they'll do is they'll either wait for a dip in that coin that made them the 5 to 10x profit and perhaps, you know, they re-enter the token for, you know, the 5th time or the 10th time or whatever count it is. And it turns out that's the time when it doesn't recover and it just keeps falling. Or they'll take their profits and they'll put it somewhere else in a different coin with momentum behind it and hope that they get the same results with this other coin. And it turns out this other coin is not like the first one. So it's, you know, if you make a gain and you're not following the right process, you don't really know why you made this gain on this particular crypto, it's not impossible to make a gain, but chances are that you're going to lose that gain in the next few investments that you make. So it's something to watch out for. With that, I'll take some questions. Ali, Assalamu alaikum. Wa alaikum salam. It's my pleasure. Salam brother Rashad. Like to know your opinion about Coinbase. Yeah, several hiccups recently. We talked about this on Discord. One of the brothers proposed Kraken. I'll need to look into them as an alternative exchange. But Coinbase, I mean, this is the second time, basically, if not the third time where Bitcoin hits an all time high, then something happens with Coinbase. And then you see the momentum is just broken and that cascades into other altcoins. So what I will say for sure is not to have all your eggs in one basket and to actually diversify where you're keeping your holdings. So don't keep them all on one exchange or all in one wallet diversify. And please, please don't click any links. No links whatsoever. You're going to get links to airdrops and different wallets. You're going to get emails about sometimes they'll impersonate Coinbase or they'll impersonate your exchange and say, oh, there's a problem with your account. Oh, you know, we there's you need to do so and so to fix your account. There's a link. It looks official. Do not click any links. If you want to know what's going on, what's happening with your account, just log into your account through the URL that you know. Don't I can't emphasize this enough. This is the time not only when investors start to get greedy with their investing, but also thieves and crooks start to get greedy as well. And they'll start targeting investors. So be very careful, please. All right. What do you think of AMD? Perhaps. And I think it's that's Rivian. Perhaps we'll talk about them in a different live. But I have spoken about Rivian briefly. And that is my comment was they have yet to prove that they can build in a sort of mass manufacturing way, build a an electric vehicle at a profit. And I don't see them. I don't see their problems ending anytime soon. They'll have some spikes on the way down. But the general trajectory here is down unless they get acquired. Keeping Solana for long term. So what we've been doing. So our strategy in a nutshell is that. Yes, we have a smaller cap altcoins and we have a larger cap altcoins and we have Bitcoin. And our strategy has been booking profits from the smaller cap altcoins into larger cap altcoins, which includes Solana and then booking profits from Solana into Bitcoin. And so by the end of this cycle, inshallah, our portfolio should look a lot like. 100% Bitcoin, right? But I do believe that there's alpha to be had in the smaller altcoins at this point in time in the cycle, and therefore we are invested in them. But as we go deeper into the cycle, we're going to start migrating some of our holdings to Bitcoin. So on that path towards Bitcoin, the profits do go through Solana. So we buy Solana and then, you know, on days like yesterday, we booked some of our profits in the form of, you know, selling some Solana, buying Bitcoin. That's our strategy. What do you think about MP? What do you mean by MP? Don't buy Dogecoin or Tesla. Elon Musk is a bad man. No, I wouldn't go that far. But obviously you're free to do what you're comfortable with, inshallah. Is crypto staking halal? Okay, so here's something that and this is actually a good point that was brought up again here in Discord, which is that. So with regards to crypto staking, when a blockchain is, for example, validating interest bearing transactions. So we know that the hadith from the Prophet, peace be upon him, is a lot. So we don't want to be catty, right? So, you know, one way to interpret staking is perhaps we are validating this transaction that may involve, you know, documenting an interest bearing loan. So this is why I've opted not to stake my Solana, for example. But staking in general as a concept, and I have a video about this. You're welcome to view it. Staking in general as a concept, I have no problem with it. When you're staking a coin to increase the security and the efficiency of a blockchain, there's nothing wrong with that. So long as what the blockchain is doing is, you know, above board and not something that the Sharia objects to. Now, someone brought up a good point in Discord, which is that, you know, well, then how are Bitcoin miners actually halal to invest in? Because the mining itself is actually validating transactions on the Bitcoin blockchain. Well, this is a good point. My response to that is that Bitcoin fundamentally doesn't lend itself to, pun intended there, doesn't lend itself to making interest bearing loans. If you're a lender, you're not going to lend out or if you're a borrower, you don't want you're not going to borrow a borrow Bitcoin because, you know, if you borrowed one Bitcoin last year and you thought you were getting thirty thousand dollars today, you owe seventy thousand dollars. So lending in Bitcoin will be extremely, extremely rare. And I don't see it being a material percentage of transactions that happen on the Bitcoin blockchain. And I have a cutoff point for, you know, investing, wherein if 2.5 percent of the revenue comes from something that is objectionable from a Sharia perspective, anything above that, I'm uncomfortable with that particular investment. And I don't think lending will like transaction fees that come from that will come anywhere near that threshold. I think it's, you know, it's like it's like seeing, I don't know, an endangered species that is seeing a transaction wherein it involves basically a loan of Bitcoin and charging interest. That's just not going to happen. Oh, I should say Ramadan Mubarak to everyone. Inshallah. I hope you take this opportunity to to get closer to your creator and you obviously make sure purify your wealth. Ramadan is a good time to do that. Make sure you connect with family and especially in our community, especially Muslims in the United States. I've noticed a lot of them are budidus. That means that their stomach goes out more than their booty does. And so they should work on that. We should not have a lot of Muslims, you know, walking around with guts in front of them. They should. I mean, it's very un-Muslim, uncharacteristic of Muslims to be out of shape and frankly weak. And I hope, you know, this Ramadan is an opportunity for all of us to get back into a better physical condition. After all, you know, when you're a Muslim, especially if you're a Muslim and you're a minority, right, you're a representation of Islam. So non-Muslims are looking at you and and they observe everything about you and they associate it with Islam. So one of the things that you need to be mindful of is your physical state and being in shape and being strong. And Ramadan is an opportunity for us to shave off the extra weight and inshallah build some muscle. All right, not really familiar with Material Corp, brother. And Ramadan Mubarak to you as well. Thank you all for tuning in. Oh, hey, we have 94 live viewers. I think that's a record. Leave a like. All 94 of you and we'll get to our 100 like goal. I'd really appreciate that. I hope you found this beneficial. Until next time, take care of yourself. Assalamu alaikum and peace be upon you all.

Introduction and greeting
Discussion on Bitcoin reaching another all-time high
Overview of Bitcoin ETFs and supply crunch
Volume of trading in Bitcoin ETFs
Bitcoin as a hedge and similarities with gold
Potential market cap of Bitcoin compared to gold
Considerations for investing in Bitcoin
Discussion on Qatar's Sovereign Wealth Fund Considering Bitcoin
FOMO spreading to other cryptocurrencies
Caution against investing in altcoins blindly
Importance of research in selecting altcoins
Importance of research in selecting altcoins
Taking questions from viewers
Discussion on Coinbase and diversification
Caution against clicking on suspicious links
Strategy for investing in smaller cap altcoins and Bitcoin
Discussion on the halal nature of crypto staking