Global Market Turmoil from Middle East Conflict and US Tariffs Prompts Crypto Investors to "Wait and See"
JAKARTA – Global market turbulence triggered by US trade tariff policies and Middle East conflict poses potential disruption to high-risk assets, particularly cryptocurrencies.
As market fluctuations mount, investors are advised to exercise restraint through a “wait and see” approach and prioritise risk management over pursuing short-term gains.
Tokocrypto CEO Calvin Kizana stated that under current conditions, the wait and see approach represents a rational stance, especially for investors. Global liquidity, the trajectory of central bank interest rates, and other global risk sentiment factors constitute the primary variables influencing fund flows into crypto assets, including Bitcoin.
“For crypto investors, current conditions demand heightened caution. Although some market participants may have already anticipated certain outcomes, macro factors such as global liquidity, interest rate direction, and risk sentiment remain the principal drivers of Bitcoin prices,” Kizana told Kompas.com.
“In many cases, institutional investors tend to reduce crypto exposure when global volatility increases, particularly if triggered by major policy shifts such as tariff increases,” he added.
According to Kizana, during risk-off phases, global asset managers typically undertake de-risking by reducing allocations to high-risk assets, including technology stocks, emerging market equities, and cryptocurrencies.
“During risk-off phases, asset managers typically execute de-risking strategies by reducing allocation to high-risk assets, including technology stocks, emerging markets, and crypto, then redirecting funds towards cash, US government bonds, or money market instruments,” he explained.
Volatility stemming from tariff policies impacts not only global trade flows but also influences economic growth expectations, inflation forecasts, and central bank monetary policy direction. Historically, Middle East conflict can affect energy prices and global monetary policy frameworks.
The combination of these factors drives investors to reduce risk comprehensively, including within cryptocurrency assets known for extremely high volatility.
Conversely, institutions with long-term investment horizons—such as major asset managers or public companies holding Bitcoin as part of treasury strategy—typically do not react as rapidly.
Unless significant fundamental shifts occur in global liquidity or regulation, such entities tend to maintain exposure consistent with their long-term investment strategies.
“Short-term institutions such as leveraged hedge funds typically reduce positions more quickly when volatility increases. Conversely, institutions with longer investment horizons, such as major asset managers or companies holding Bitcoin as part of treasury strategy, tend not to react as aggressively, unless major fundamental changes occur in liquidity or regulation,” Kizana concluded.