KUALA LUMPUR: The cryptocurrency market remains highly volatile, with prices fluctuating amid uncertainty over geopolitical conflicts, particularly the West Asia conflict and its potential impact on global oil supply.
Monash University Malaysia Professor of Finance and Head of the School of Business, Nafis Alam, said that such conditions prompt investors to reassess risk continually.
"Each new headline can trigger brief price spikes or drops, but without a clear resolution, these movements rarely develop into a sustained trend,” he told Bernama.
Nafis expects this volatile trading to continue for two to six weeks, as markets await clarity.
"Volatility generally eases only when credible de‑escalation occurs, such as a ceasefire or reduced tensions.
"Conversely, if a conflict triggers lasting economic changes like a prolonged oil shock affecting inflation and interest‑rate expectations, crypto could break out of its current trading range along with broader risk markets,” he said.
At the time of writing, Bitcoin on Malaysia’s cryptocurrency exchange platform Luno dropped 4.15 per cent to RM273,944.
According to a report by Luno, global markets staged a rebound following tensions in West Asia, with Bitcoin climbing to US$7,000 midweek as investors scrambled for safe-haven assets.
In the short term, Nafis noted that crypto behaves more like a risk-sensitive asset than a traditional haven, with price movements increasingly influenced by macroeconomic factors rather than headlines alone.
Echoing Nafis’ view, Luno Malaysia’s deputy country manager, Jeroni Khoo, said that cryptocurrencies are currently acting as "risk-on” assets, similar to tech stocks, and are expected to remain risk assets during the war in West Asia.
He said that geopolitical developments are unlikely to materially alter the broader crypto market this year unless high-impact escalation thresholds are crossed.
"For example, as a sharp spike in oil prices following a closure of the Strait of Hormuz, regional conflict spreading beyond the West East, or a major pivot in the US Federal Reserve (Fed) policy,” said Khoo.
To gauge whether downside risks are intensifying, he advised investors to monitor four real-time indicators: funding rates; derivatives positioning; institutional flows, including net spot Bitcoin exchange-traded fund flows; and liquidation data.
Khoo said it is critical to interpret these indicators collectively as a system rather than individually.
"Broader market movements will largely depend on geopolitical and macroeconomic developments.
"Should the Fed tighten monetary policy in response to oil-driven inflation, risk assets would face headwinds. However, if the Fed pivots to emergency liquidity injections, it would be a tailwind for crypto prices,” he added. - Bernama
