By Samuel Indyk
Investing.com – Bitcoin and other major cryptocurrencies were lower on Friday as riskier assets came under selling pressure following the emergence of details about a new COVID variant.
The risk-off price action has not been confined to the cryptocurrency space, with safe-haven currencies JPY and CHF strengthening, selling observed in global equities, and gold and US Treasuries trading higher.
Bitcoin, which is the largest cryptocurrency by market cap, dropped to around $54,000, its lowest level since 9th October.
Other major cryptocurrencies were also lower with Ethereum testing $4,000 to the downside. The second-largest coin has not traded below the key psychological level since 19th November.
Cardano, Solana, Dogecoin, Shiba Inu, and XRP were all trading with losses between 2% and 10%.
“The spread of (the variant), especially to other countries, could wither investor appetite further," said Yuya Hasegawa cryptocurrency exchange Bitbank. “Bitcoin’s upside will likely be limited and the market should brace for further loss.”
Technical analysis
Following today’s drop, Bitcoin is now trading in close proximity to its 100-day moving average at around $53,950. A drop below that level could open the door to $52,500 before the $50,000 level comes into play.
However, much focus in the near term will depend on the new B.1.1.529 COVID variant and the impact it could have on global financial markets.
For now, Danske Bank highlights three questions that need to be answered:
- Is transmissibility higher?
- Is it more dangerous?
- Is the variant better able to evade immunity?
Unfortunately, until there is more data, the answers to these questions won’t be available immediately and the uncertainty surrounding the new variant may linger for a while longer.