KUALA LUMPUR: The cryptocurrency market is in a space where there is a lot of uncertainty due to public concerns about inflation and the actions of the US Federal Reserve (Fed), said Luno Malaysia country manager Aaron Tang.
He explained that “uncertainty” is not only limited to crypto but to others as well, such as the stock market and the property market. He opined that people are concerned about inflation and the course of actions of the Fed.
“If I could just give a one-word answer, the mood right now is that every one is quite cautious, because investments come with risks,” Tang told reporters after launching the Move With Luno campaign today.
“Let’s not sugar coat it or any thing, (but) investments always come with risks. There’s always a risk of things crashing, there’s also potential for price depreciation. So again, we always remind our investors to not take on more risk than you can afford,” he added.
Given the recent depreciating value of bitcoin and the fall of TerraUSD, Tang said people need to understand that crypto markets and the trading of digital assets are in the “higher risk of the spectrum”, as it has a higher risk compared with the trading of traditional assets.
He said it should serve as a reminder that volatility can happen but added that, based on his observation, a lot of Malaysians took advantage of the crypto market and bought when the price crashed.
On any correlation between crypto and other asset values, Tang said for the past few months, the correlation between bitcoin and, for example, stocks, has increased. He observed that recently, investors who were selling their stocks were selling crypto simultaneously.
“However, if you zoom out, taking a three-year or five-year view, bitcoin historically has very low correlation with stocks or gold and all. It kind of behaves as an independent asset. But again, over the past few months due to the recent downturn, in everything. Bitcoin’s correlation with the stock market has crept up also,” he said.
Additionally, Tang does not see a correlation at a one-to-one basis because, even at its peak, it was around 0.8 correlation but only time will tell. He foresees that the correlation will likely decrease, as it moves past the current situation.
On Luno’s trade on a daily basis, Tang estimates trade at 100 bitcoins per day. If one bitcoin was valued at RM100,000 then it
would be more than RM10 million worth of trading daily.
Currently, the digital asset exchange is focusing on expanding its reach and increasing the number of registered customers. To date, it has more than 700,000 customers in Malaysia.
The Move with Luno campaign aims to inspire Malaysians to progress in their personal finance journeys to reach financial fitness. The campaign seeks to empower Malaysians to build their understanding of digital assets and investing as part of financial literacy, and will use education to dispel common misconceptions around cryptocurrencies.
The campaign initiatives have been designed to meet the growing demand for digital assets – from individuals looking to kick start their investment journey – to crypto beginners looking to build their education and understanding of digital assets.
