by Tan Aik Keong (AK)
The recent surge in cryptocurrency prices has captured global attention, raising real questions about what's driving it and what it means going forward. Bitcoin's price has climbed from USD 27,900 to USD 69,000 — a staggering 147% increase compared to just a year ago.
What's driving the bull run
1. The SEC's approval of spot Bitcoin ETFs. An ETF is an investment fund that tracks an underlying asset's performance — conventionally stocks, a currency basket, or precious metals like gold. Now Bitcoin is included too. That lets investors get exposure to Bitcoin's value without directly owning it, offering both institutional and retail investors a more convenient way into the crypto market. Institutional investors have increasingly treated cryptocurrency as a legitimate asset class, and their entry — chasing diversification and high potential returns — has brought substantial capital and credibility into the ecosystem. Retail interest has surged alongside it, helped by more user-friendly platforms and growing awareness of digital assets.
2. Macroeconomic factors. Amid global economic uncertainty — inflationary pressure, unconventional monetary policy — cryptocurrencies are increasingly seen as alternative stores of value. Bitcoin in particular has drawn attention as a hedge against currency devaluation and inflation.
3. Technological innovation. Ongoing blockchain advances have unlocked new use cases beyond speculative trading — decentralised finance (DeFi), NFTs, and blockchain interoperability are all driving innovation and adoption. Bitcoin inscriptions, notably, enable a new way of writing digital artefacts — images, video, text, audio — directly onto the Bitcoin blockchain, turning it into something more powerful than just a digital currency.
4. Bitcoin halving. Bitcoin halving cuts the mining reward in half roughly every four years — a mechanism written into Bitcoin's mining algorithm to counter inflation by preserving scarcity. Historically, each halving has preceded a significant bull run. With roughly 4,450 blocks left until the fourth halving (scheduled for April 2024), miner block rewards will drop 50%, from 6.25 BTC to 3.125 BTC.
What it means for Malaysia
Rising adoption. Malaysia has seen growing interest in cryptocurrency, with a rising number of investors and trading platforms. The Securities Commission has so far approved or conditionally approved six digital asset exchanges. Digital assets have democratised investment access, particularly among younger investors, and blockchain use cases have expanded further with NFTs and GameFi-style play-to-earn tokenomics.
Regulatory progress. It's encouraging to see more regulated crypto-related companies coming under the Securities Commission's purview — a sign policy is keeping pace with the technology. That now includes Initial Exchange Offering operators, digital asset custodians, and digital asset fund managers like Halogen Capital.
Economic opportunity. Cryptocurrency holds real promise for financial inclusion and economic growth in Malaysia. Blockchain technology can streamline processes, cut transaction costs, and expand access to financial services, particularly for underserved populations. Zetrix, Malaysia's national public blockchain infrastructure, has already built several cross-border use cases — digital ID, customs clearance and trade financing platforms — in partnership with the Chinese government, for use across RCEP member countries.
Closing
The recent crypto bull run has sparked both optimism and caution in equal measure, reflecting the complex interplay of market dynamics, technological innovation and regulatory consideration. In Malaysia, growing interest in cryptocurrency brings both opportunity and real challenge, underscoring the need for balanced regulation and proactive industry engagement. Cryptocurrency holds transformative potential, but its future will depend on navigating regulatory hurdles, advancing the technology further, and building genuine trust among stakeholders — whether it ultimately reshapes the future of finance depends on how well these challenges are addressed in the years ahead.
Part of the AK AI Corner column. Originally published in Oriental Daily (东方日报) on Apr 7, 2024.