June 15, 2022
KUALA LUMPUR – PETALING JAYA: The crash of cryptocurrency and the bearish crypto market serves as no dampener for young investors who are willing to hold on to their digital investment assets.
Anthony Pang, a 30-year-old forex trader who invested in several cryptocurrencies said he was aware of the current bear market.
“But now, I’m letting it hold,” said Pang.
However, Pang was optimistic, as most of his investment is placed on forex trading, and cryptocurrency only comprises less than 30% of his investment portfolio.
“I only consider it a loss if I cash out in this bear market,” said Pang, who did not disclose the amount his assets have dropped in value.
Pang, who has been dabbling in cryptocurrency investments since 2020, advised youths not to invest everything into cryptocurrency.
“Invest only the money you can afford to lose,” said Pang, who is also a freelance model.
Bitcoin made global headlines when it crashed to below US$24,000 (RM106130.40), which is the lowest level since 2020.
This comes as part of a series of price crashes for the cryptocurrency, which has seen a more than 60% drop in value over the last seven months.
It was also reported that global market capitalisation shrunk by 12% to US$970bil (RM4.29 trillion) on Monday (June 13).
Bitcoin day trader Muhamad Al Hafiz Hambali, 35, said that he does not feel anxious about the unpredictability of cryptocurrencies as he is well aware of the risk.
“I have spent almost RM10,000 in less than a year. Now we are facing a ‘minor hiccup’ and I believe the situation will return to normal soon,” said the trader, who is a father of two.
He added he got into cryptocurrency by chance and picked it from videos he watched on YouTube.
“I find it very interesting and initially I made a lot of money,” he said, adding that it helped to cover some of his family expenses.
He hoped that authorities would take measures to raise awareness on the issue in order to make it more mainstream and accessible to more people.
Jeffrey Halley, who works in online forex trading, said cryptocurrencies were slumping along with other asset classes as high inflation in the United States raised concerns that the US Federal Reserve would embark on a more aggressive interest rate hikes and other central banks in the world may also do the same.
“It has been exacerbated by liquidity issues and crypto-lender Celcius stopping depositors from getting their money back,” said Halley, OANDA’s senior market analyst for Asia Pacific.
He was referring to Celsius Network freezing withdrawals, swaps and transfers.
“Well, cryptocurrencies and their spectacular rally are perhaps the most strident example of speculative excess that occurred as central banks slashed rates to 0% and qualitatively eased over the pandemic.
“Now that inflation is entrenched for the first time in 20 plus years, and central banks globally are tightening monetary policy, cryptos, like equities, are facing a reckoning over their true valuations as interest rates rise,” he said.
Naturally, there’s a lot of fear in the market with panic sellers reacting aggressively to market conditions, he added.
“Speculators are being hit the hardest naturally and much like in 2017, you will see many such participants exit the market with the remaining projects and investors building to the next cycle,” he said.
Meanwhile, George Wong, of Access Blockchain Association Malaysia, said the slump was due to a combination of factors and US inflation rates, the US stock market as well as the major issue caused by Celsius all had a role to play.
Access Blockchain Association Malaysia is a non-profit organisation specialising in blockchain development and cryptocurrencies.
However, Wong said that the drop has been cyclical and it is not the first time such a slump has occurred.
“Like mentioned, it happened in 2017 and you’ll see it happening again in the next cycle. I expect the speculators to exit, like I mentioned and the fundamentally strong projects to continue building in the market. Bitcoin, to me, will continue to be a store of value although I do see other cryptocurrencies slowly gaining dominance as Bitcoin is certainly an ageing tech having been the first in the market,” added the subcommittee chairperson for NFTs and Metaverses over at Access Blockchain Association Malaysia.
On whether more people are disposing of their holdings due to the tough economic times, he said this boils down to market sentiment and people may be trying to preserve their wealth and are taking steps to cut their losses in the face of such an aggressive downtrend.
“Many forget that many millionaires were made in the rally not too long ago and there was a lot of easy money being spent particularly in NFTs (non-fungible tokens).
“I can’t exactly say which assets are hit the hardest as this has yet to be seen. I do not think we have seen the bottom in the overall market, not just crypto, and which is the hardest hit has yet to be seen.
“I personally think commodities will be the most robust within these 1-2 years for obvious reasons but it’s hard to predict if you’ve seen the bottom of cryptos yet,” he added.
Wong advised investors to not rush into any buying decisions right now as many things seem cheap and the market could plunge deeper. He went on to add that reacting “too quickly” may also result in major short-term and even mid-term losses.
“It’s important to practice a bit of prudence in the current market climate. Cash is really king as opportunities may arise in such a crisis and if anything, there are plenty of options in the market.
Fundamentally strong companies or projects are particularly viable at this point in time and they’re easier to identify as the scam or speculative projects are exiting the market aggressively,” he said.