Crypto tumbled around 10% on Friday after the discovery of a new, potentially vaccine-resistant coronavirus variant called B.1.1.529.
The World Health Organization on Thursday gave a briefing on the new variant, which is known as B.1.1.529 and is thought to contain more than 30 mutations. The U.K. and other nations have temporarily suspended flights from six African countries in response.
Crypto tumbled around 10% on Friday, dragging smaller tokens down, after the discovery of a new, potentially vaccine-resistant coronavirus variant saw investors dump riskier assets for the perceived safety of bonds, the yen and the dollar.
Bitcoin, the largest cryptocurrency, fell around much as 10% to $53,500, its lowest since October 12. It was on track for its biggest one-day drop since September 20. The markets have seen investors dump riskier assets for the perceived safety of bonds, the yen and the dollar.
Bitcoin has often been described by its proponents as “digital gold,” a reference to the yellow metal’s status as a so-called safe haven asset. Crypto investors say the virtual currency offers a store of value as well as a hedge against inflation.
Stocks dropped as well as crypto. Global oil prices have plunged below $80 a barrel after “the most worrying” new variant of Covid-19 was identified in South Africa, raising fears in the market of renewed global travel restrictions that could derail the oil market’s recovery.
“Ironically, yesterday afternoon crypto markets were starting to look pretty optimistic with hopes of a Santa Claus rally,” said Jonathan Cheesman, head of over-the-counter and institutional sales at crypto-derivatives exchange FTX, in a note Friday. It “will be a nervous weekend for sure.”
“This is a market reaction/correction within an uptrend,” said Vijay Ayyar, head of Asia-Pacific at Luno Pte., who pointed out that options-expiration days—like Friday—can often be volatile. He said a drop down to the $48,000 to $50,000 range might be more concerning, and that “20% pullbacks are normal in a Bitcoin uptrend as we’ve seen many times before.”