A new variant of the coronavirus was identified in South Africa, which prompted liquidations across markets from all over the world. Omicron, as the scientists named the virus strain, ruined European stocks, causing them to fall to their lowest since summer. The US stock market wasn’t spared either, nor was the cryptocurrency universe – Bitcoin dropped to about $53,552 on Friday.
That accounts for a 20% price dip from the record high Bitcoin achieved a few weeks ago. The same day, the value of Ether also dropped. Over the course of 24 hours, the ETH price plummeted by over 12%.
Gold, on the other hand, climbed by 1.5%, further strengthening the claim that investors move to traditional assets in times of crisis.
Bitcoin and Omicron
The B.1.1.529 variant a.k.a. Omicron was first reported to WHO on November 24 in South Africa. However, it’s thought that the strain has been around for at least a couple of weeks, which explains the sudden increase in the number of infections in this part of the world.
As soon as the news regarding the Omicron variant started spreading, crypto investors started selling their digital assets in a similar manner they did in spring 2020. As a reminder, when the first wave of the COVID-19 pandemic started in the US and Europe, it followed a large-scale sell-off of crypto assets.
In February 2020, Bitcoin was somewhere near the $10,000 mark, but just a few weeks later, its value slide to under $4,000.
The good news for cryptocurrency fans is that the latest price reduction is nowhere near the 2020 levels. It’s very likely that it will recover, although Omicron isn’t the only factor influencing the price move.
Other Factors Influencing the BTC Price
Omicron is just one of several reasons why Bitcoin shed some of its value last week. Another important factor is governmental involvement. Over in China, the regulators have started a new phase in dealing with cryptocurrency trading and mining, the activities they want to be eliminated in the foreseeable future.
In India, lawmakers are reportedly working on a new bill that could put an end to cryptocurrency trading in the country. Finally, in the United States, President Biden has signed a new infrastructure bill that comes with certain tax-reporting requirements for crypto transactions. The new bill requires traders to report crypto transactions to the IRS, along with the personal details of both the seller and the buyer.