Bitcoin has now officially entered a bear market territory, as it slumped further on fears of the new COVID-19 variant. Bitcoin slumped over 20 percent from its recent record high of $69,000, which it achieved just this month.
Bear markets, at least for most traditional and non-volatile asset classes, are defined by experts as a slump of 20 percent or more from recent highs. Bitcoin was trading at an all-time high of $68,990 on November 10, while it traded at $55,110.90 at the time of writing, according to Coindesk. The world’s most popular cryptocurrency sank nearly 8 percent in the 24 hours from November 25 to November 26 to $54,321, according to Coin Metrics data.
Bitcoin was not the only volatile asset class that saw a sudden slump in price. Other cryptocurrencies fared similarly, with Ethereum, Solana, Cardano, and XRP all trading in the red over the past week. Other risk assets like equities, commodities, and high-yield bonds too witnessed sharp slumps.
The reason behind the drop in prices is the news of the B.1.1.529 or Omicron variant of SARS-CoV-2 being declared as a ‘variant of concern’ by the World Health Organisation. While the Omicron strain was first spotted in genome-sequencing data from Botswana, it has now spread to South Africa, Hong Kong, Belgium, Israel, Malawi, Lesotho, Eswatini, Zimbabwe, Mozambique, and Namibia. Amid fears that this new strain can possibly restrain existing vaccines against COVID-19, stock markets all around the world registered a decline as investors sold off risky assets.
While Bitcoin was first seen as a currency or asset class protected from the volatility of the market and inflationary pressure, it has turned into one of the most volatile assets on record with multiple swings of 10 percent recorded in a single day. The world’s first cryptocurrency has risen from a value of around $3,700 from the start of January 2019 to nearly $69,000 in November, an increase of over 1,700 percent.
