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Bitcoin dips by nearly 10% as COVID-19 rattles crypto market

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On Friday, bitcoin dropped sharply along with other assets, reaching a seven-week low and posting a suppressed selling sentiment.

According to FTX data, the world’s biggest cryptocurrency fell by nearly 10% for the day to $54K. That’s the lowest level bitcoin has reached since early October. For the day, the global crypto market value decreased by 5.83% to $2.47 trillion.

From an all-time high of nearly $69,000 earlier this month, Bitcoin is down more than 20%. Typically, bear markets decline by at least 20% from recent highs.

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Several other cryptocurrencies also fell Friday. The second-largest crypto and leading altcoin Ethereum, lost more than 10% in value to stay slightly above $4K, while XRP fell 9.9% to just under 95 cents.

A new, heavily-mutated form of the Coronavirus first detected in South Africa has caused digital currencies to fall alongside other risk assets

An official briefing on the new variant – known as B.1.1.529 – was given by the World Health Organization on Thursday. In response, the United Kingdom and other countries halted flights to six African nations in response.

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U.S. stock futures plunged sharply and European stocks were set for their worst session in more than a year.

Even if Bitcoin and risky assets such as stocks do not always move together, there is an increasing correlation between the crypto and the S&P 500 that has reached new highs this year. As a result, Bitcoin’s use-case as a hedge against volatility will be diminished when stocks fall

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Bitcoin has often been described as “digital gold” by its proponents, referring to gold’s status as a so-called safe-haven asset.

Virtual currencies are viewed by cryptocurrency investors as a store of value and inflation hedge.

Considering bitcoin is a volatile asset, it is not surprising that its price has been known to swing by more than 10% in a single day.

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