This Week’s Top Headlines

i) Bitcoin’s inevitable retracement arrives as it loses its foothold of $30,000 and falls to $27,500, representing a 12.60% decline in the past 7 days.

ii) Malaysia’s latest inflation moderates to 3.4%, led by the declining prices of oil. Despite this, many still perceive it to be high. Hann, founder and ex-CEO of RinggitPlus, shares his insights.

iii) A recent study conducted by market research firm IPSOS on “What Worries Malaysia” indicated that 66% of Malaysians believe that the country is on the right track after GE15.

Scroll down to read the details.

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Cryptos Slump as Bitcoin, Ethereum, and other Key Altcoins Fall Over 10%.

This week has seen the crypto market retrace after an impressive run since the banking crisis in March. Bitcoin and Ethereum both led the market decline, falling by 12.60% and 14.56% in the past 7 days, respectively.

Bitcoin held the $30,000 mark strongly till midweek, but was met with strong profit-taking from investors and ultimately surrendered its first bullish support. It is currently trading at $27,702, with the next supports at $27,500 and $25,000.

Ethereum experienced a similar trend, rallying briefly to $2,140 due to its highly anticipated "Shapella" upgrade that enabled the withdrawal of staked ETH on the network. It kept its head above $2,100 during the earlier period of the week before diving to $1,826.

Over $550 million of Long Traders were Wiped in this Downturn

Bullish, leveraged traders were hit hard this week, with more than $550 million of long positions liquidated in the downturn. A number of these traders went long when Bitcoin was holding firm at the $30,000 mark, believing that the rally would continue uninterrupted.

Despite the retracement, the "Crypto Fear & Greed Index" by Alternative continues to indicate a greedy market sentiment, suggesting that the slump is far from disastrous.

Compared to the events of 2022, this downturn is relatively mild.

Malaysia’s March Inflation Moderates to 3.4%, But Why does it still Feel so High?

The overall inflation rate in Malaysia has cooled to 3.4% in March compared to 3.7% the prior month.

According to the Department of Statistics Malaysia (DOSM), the slower increase was attributed to the declining prices of Unleaded petrol RON97, which eased the Transport group inflation to 2.4%.

This trend was consistent with the downward trajectory of Brent crude oil, which dropped to $78.53 per barrel in March 2023, down from $115.59 in the previous year.

Despite this, DOSM noted that Malaysia's inflation rate remained relatively high due to the persistent prices of Food & Non-Alcoholic Beverages (6.9%) and Restaurants & Hotels (7.2%).

Meanwhile, core inflation, which excludes volatile items like food and fuel, recorded a year-on-year increase of 3.9% in March, down slightly from 3.8% the previous month.

Six states recorded inflation rates above the national average, namely WP Putrajaya (4.5%), Selangor (4.0%), Sarawak (3.8%), Johor (3.7%), Pahang (3.7%), and Perak (3.6%).

Kedah recorded the lowest increase of 2.1%.

While it is relieving to see inflationary pressures easing over the past few months, Malaysians still feel that prices are much too high. Hann, the founder and ex-CEO of RinggitPlus said that this was due to two key reasons:

Purchase Frequency

Hann explained that the items bought the most frequently went up the most and remained sticky, which made Malaysians “feel” as if inflation is higher compared to the previous year.

The notable categories include Food & Non-Alcoholic Beverages (6.9%) and Restaurants & Hotels (7.2%).

Sticky Memory

Pointed out by Hann, a study from Bank Negara Malaysia conducted back in 2017 showed that people are more likely to remember price increases and disregard price declines.

For example, if a cup of coffee increased by 20% in 2022, we tend to keep that 20% in our minds, even if the price remained constant throughout 2023.

What’s next?

Hann expects the overall inflation to fall to 3.0% in the next few months and cool to 2.5% by Q3 this year, barring any global “shocks” or black swan events.

Inflation No Longer the Top Concern of Malaysians - recent IPSOS Study

According to a survey conducted by research firm IPSOS on “What Worries Malaysia”, 66% of Malaysians believe that the country is in the right direction five months after GE15.

The survey indicated that the sentiment towards the country hit an all time high in January.

IPSOS explained that the sentiment normally peaks after government changes and slips to a “new normal”, as seen during national elections around the world.

The survey also found that inflation concerns have been trending down since its peak in January.

The top concern of Malaysians is corruption, with 51% of the respondents considering it their primary worry, up from 43% in January 2023.

Unemployment and job concerns came in second, at 35%.

Despite the downtrend in inflation concerns, the survey revealed that Malaysians are not as comfortable making purchases as before.

Only 47% of the respondents are comfortable with household purchases and 43% with major purchases - a decline from January 2023.

Ipsos is the third largest market researcher in the world and conducts monthly surveys in 32 countries via an online portal system. The most recent survey on Malaysia saw 500 participants.

That’s all for this week’s newsletter!

Disclaimer: I am not a financial advisor. This newsletter is based on my own analysis and research. Do not take any of it as financial advice.

*This newsletter was written at 9.30 AM on 24th April 2023 and completed at 3.30 PM the same day. To get early access to our newsletter, be our patron for as little as $1/month!