Bitcoin is trading at a discount of 22 per cent compared to a high of $69,000 (£51,000) reached on November 10 after a new covid variant spooked markets.
News that a highly transmissible and possibly vaccine resistant variant of Covid-19 has spread to Hong Kong and Israel from Southern Africa has prompted investors worldwide to drop high risk investments. London’s FTSE-100 index is down by 2.7 per cent today with losses led by aviation companies and hotel groups, while Tokyo’s NIKKEI index has fallen by 2.5 per cent.
Meanwhile, the crypto market wiped more than $200bn from its market cap, falling eight per cent in the past 24 hours.
“This is a broad financial problem,” said Charlie Morris, investment chief for analytics firm ByteTree.
“Bitcoin is correlated to other risky assets which have fallen today including equities and commodities such as Oil which have gone down because of fears of renewed lockdowns in response to a new Covid strain.”
“Bitcoin is a risk-on asset and does best when financial markets are thriving,” Morris added. “As we often see on a Bitcoin down day gold is up slightly.”
Trading around the $54k mark, Bitcoin has shed 6.8 per cent of its value today whilst Ethereum was down 8.8 per cent, Solana was down 10.43 per cent and Polkadot tumbled by 10.41 per cent.
The momentum behind the crypto markets looked unstoppable earlier this month when the world’s largest digital assets – Bitcoin and Ethereum – both topped new all-time highs. The SEC’s decision to approve Bitcoin Futures ETFs was seen as a pivotal moment for the mainstream adoption of crypto currency.