Has Omicron lost Bitcoin’s dream of being a safe haven?

Over the past week, as markets rocked on fears that the omicron variable could derail the global economic recovery, bitcoin they remained surprisingly stable. Then came the weekend.

But during the trading last Saturday, the cryptocurrency fell more than 20%, while it is now trading at around $ 50,000, in drop from about $ 57,000 in early December.

“We are seeing this persistent fear of the Omicron variable dominating the performance of the cryptocurrency market,” says Marcus Sotirio, trader at the broker. asset Global Block digital.

Advocates of Bitcoin often advertise its potential as a safe asset that trades independently of stocks, bonds and commodities. prime, giving it a potential role for investors looking to offset their risks.

However, the decline in Bitcoin, which analysts have linked to a decline in investor and market sentiment, is a sign that the larger cryptocurrency remains closely tied to other parts of the market, especially as more institutions increase their exposure.

And when markets retreat, investment managers unload theirs first asset more risky. Jeroen Blokland, founder of research firm True Insights, sees this trend making cryptocurrencies vulnerable. in particular Bitcoin. “Bitcoin responded and plummeted once sentiment in stocks and markets plummeted,” he added.

The sell-off has been in largely driven by institutional earnings of bitcoin before the end of the year due to growing uncertainty.

According to Soterio, “This market crash shows that the bitcoin it is not completely separated from global markets … it has not yet reached the stage in which is large enough to hold “.

Meanwhile, the CNN Business Fear and Greed Index, which tracks market sentiment, is in territory of “extreme fear”. Just a month ago, the index reading showed “extreme greed”.

But questions about the Omicron variable frightened investors and prompted several big players to attempt earnings for 2021. The S&P 500 has dropped more than 3% in the past two weeks, but questyear is still almost 21% in more quest’year.

Blockland believes that one of the reasons for the decline of bitcoin be the weak trading on the weekends. “I don’t think the whole sentiment-driven rally is over,” he added.

But the sell-off serves as a reminder to professional investors that the bitcoin it is not isolated from market fears. Indeed, the market may be more sensitive, as the asset class fluctuates three to four times as much as stocks. “The greater the volatility, the greater the decline,” Blockland added.

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