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As many countries choose to "live with COVID-19", investment markets are becoming more active. That is until an unwelcomed guest puts a damper on the market. From the moment the World Health Organization (WHO) announced the appearance of the new COVID-19 variant called 'Omicron*' through an emergency meeting on the 26th (local time), the world has been trembling in fear and the market started to freeze again.
- FYI: Omicron, which appears to have an increased risk of reinfection compared to other variants, is believed to be from South Africa and estimates that it could be up to six times more potent than the delta variant, which currently accounts for the majority of people infected with COVID-19.
The stock and oil, and the cryptocurrency markets, which were booming in liquidity overflowing with quantitative easing, were also affected by Omicron.
It will take about two to eight weeks for more information on Omicron to come out on 26th, the fear that the global economy could slow down again due to the spread of the new variant dragged down the US Dow by 2.53%, the NASDAQ by 2.23%, and the S&P 500 by 2.27% compared to the previous day. On the same day, the UK stock market closed 3.64% down, German and French stocks fell more than 4%, and Japan's Nikkei 225 Index and China's Shanghai Composite and Hang Seng Index fell 2.53%, 0.56% and 2.67%, respectively.
The cryptocurrency market also suffered a downtrend. According to CoinMarketCap, the price of Bitcoin fell to around $53,000 per BTC, which is a drop of more than 20% from an all-time high of $69,000 at the beginning of the month. Other major cryptocurrencies including Ethereum also experienced a similar plunge, and it was a shocking day for many cryptocurrency traders. (Of course, two thumbs up for those holding short positions👍👍)
It would be unreasonable to say that the Omicron is the sole cause of all asset declines. There may be various factors such as policy stances and ideological conflicts, and in the case of cryptocurrencies, the recent refusal to approve Bitcoin ETFs, the US infrastructure bill, the IMF, and anti-cryptocurrency views from various countries may have contributed to the decline. Nevertheless, the opinion of many experts is that the future of cryptocurrency still looks bright. In fact, as of this writing, Bitcoin has already surpassed the $57,000 level.
Despite a series of bad news, the industry's outlook for the Bitcoin price and cryptocurrency market remains optimistic. "Bitcoin's Relative Strength Index (RSI*) is at a similar oversold level to what happened on the 27th of last month, before the price recovery," and "It appears that the Bitcoin correction that started after the highs is over.” said Damanick Dantes, an analyst at CoinDesk.
- RSI is a number used as an auxiliary indicator for Bitcoin investment, and is a lagging indicator that determines whether overbought or oversold by calculating the average value of the price increase and decrease over a certain period.
The continued inflow of funds from institutional investors is also cited as the basis for the optimistic long-term outlook. As of the 22nd, it is known that the assets under the management of Grayscale, the world's largest cryptocurrency asset management company, exceeded $52.3 billion.
Since the cryptocurrency market is highly volatile, it is always better to hedge against variables. MCS, a cryptocurrency futures trading platform, can help you with that.
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