Political uncertainty has risen to extremity in the Middle East as Saudi Prince Alwaleed bin Talal, the richest Arab in the world has been arrested in Saudi Arabia.
Saudi Arabia’s crackdown
The arrest was initiated as step against corruption in the country. The arrest of senior princes and many senior officials from ministerial roles are ordered by King Salman, which includes Saudi Prince Alwaleed.
Prince Alwaleed had expressed negative views on Bitcoin in recent news saying that Bitcoin would face an Enron-like collapse. Even though King Salman has revealed the arrest as his drive against corruption, many comment it to be a planned move to crown his son Crown Prince Mohammed bin Salman as the King.
Qatar under siege
Qatar has been accused of harboring Islamic militants and maintaining a relationship with Iran, Saudi Arabia’s staunch enemy. Hence, a blockade has been imposed on the country by Qatar’s neighbors such as Saudi Arabia, Egypt, Bahrain and UAE from early June 2017.
Qatar is a small country with large natural gas reserves situated in the Middle East. As per World Bank reports, the highest per capita GDP based on purchasing power parity ($127.5K in 2016) is owned by the country. The 2022 FIFA World Cup is also to be hosted by the country.
Qatar’s support for Al Jazeera, a news organization that aired views contrary to the established position in the Middle East is believed to be the actual reason for imposing such a blockade. This independent news channel has raised many hackles to neighboring countries enjoying absolute power.
Bahrain on the verge of collapse
Bahrain with its GDP five percent the size of Saudi Arabia is one of the smallest economies in the oil-rich Middle East. The economy is dependent on oil and recent lowering of oil prices has adversely affected the economy.
The dwindling foreign currency reserves has caused strain as The Central Bank of Bahrain has pegged its currency to the US dollar (0.376 Bahrain Dinar = 1 US dollar). Bahrain has approached Saudi Arabia for help in financial crisis and currency devaluation in future. As most currencies are pegged to the US dollar, currency devaluation can appear to be contagious.
Bitcoin rises when governments screw up
When political or monetary space is misused by governments, people look out for safer deposition of wealth. With decentralized and boundary-less nature of Bitcoin, it can be considered as an alternate safe haven like gold.
As The Middle East comprises of vast oil and natural gas reserves and tremendous wealth is possessed by its citizens, depositing a fraction of their wealth in Bitcoin can cause Bitcoin’s price to attain new highs.