As Omicron Variant Increases Financial Market Volatility, Cryptocurrency Also Fluctuates
[Asia Economy International Desk Reporter] Bitcoin prices plunged 22% in a single day, briefly breaking below the $42,000 level.
On the 4th (local time), according to economic media Market Insider and others, Bitcoin prices fell more than 20% within a day based on Greenwich Mean Time (GMT), dropping sharply to $41,967.5 during trading. Ethereum also plunged more than 10%, causing the entire cryptocurrency market to collapse.
According to cryptocurrency data platform CoinGecko, the total market capitalization of 11,392 coins shrank by nearly 15% to $2.34 trillion. When Bitcoin hit an all-time high of $69,000 in early last month, the total cryptocurrency market cap had exceeded $3 trillion.
Market Insider reported that amid the global financial markets being exposed to high volatility due to the spread of the new COVID-19 variant 'Omicron,' the cryptocurrency market also plummeted.
The Wall Street Journal (WSJ) analyzed, "This signals that investors are pulling away from riskier investments following stock sell-offs."
Amid anxiety over the Omicron variant and November employment data falling significantly short of Wall Street expectations, the three major indices on the New York Stock Exchange on the 3rd all declined: Dow (0.17%↓), Standard & Poor's (S&P) 500 (0.84%↓), and Nasdaq (1.92%).
Some analysts in the cryptocurrency market predict that if Bitcoin fails to hold the $40,000 support level, it could fall to around $30,000, the lowest level seen in July.
Antoni Trenchev, co-founder of cryptocurrency lending firm Nexo, said, "Due to leveraged trading by cryptocurrency traders, cascading sell orders and liquidations occur," adding, "If support between $40,000 and $42,000 is not maintained, prices could fall back to between $30,000 and $35,000."
Katie Stockton, founder of cryptocurrency market research firm Fairlead Strategies, suggested that cryptocurrency derivatives likely contributed to the further price decline, and that the weakness of high-growth tech stocks, which have a positive correlation with Bitcoin, also acted as a negative factor for cryptocurrencies.
On the other hand, Justin D'Anethan of cryptocurrency exchange EQONEX described it as a buying opportunity, reporting that many traders in the cryptocurrency market are preparing cash for additional purchases.
According to cryptocurrency information site CoinMarketCap, as of 2:05 PM Eastern Time, Bitcoin prices reduced their losses and were trading at $48,940.50, down 10.92% compared to 24 hours earlier.
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