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

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.

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.

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

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.