Omicron And Crypto Market Mutations

The discovery of a heavily mutated variant of coronavirus, since named Omicron by World Health Organization has caused palpable consternation in world markets. Just as markets were trying to celebrate the offshoots of growth, the buoyancy in activity and the diminishing caseloads, news of a new strain of the virus hit markets, plunging it into a seller’s market. Concerns about vaccines’ efficacy against the new variant hurt markets further and the markets have mutated to intermittent bouts of hope and despair.

How have cryptocurrencies managed the Omicron turbulence?

How have other financial and real assets performed in this whipsawing market?

Are the Omicron-triggered losses recouped?

Which asset or asset class has bounced back the most?

We are attempting an inter-asset and intra-asset comparison of the current levels vis-à-vis the position prevailing as on 25th November, i.e., a day before the Nov 26 market rout, so as to gauge the extent of rebound in each of the assets/ asset classes.

Bitcoin is currently trading at $57,648.62, higher than the price of $57,274.68 on Nov 25. Fidelity Investments launching a spot Bitcoin ETF in Canada, Bitcoin network overtaking PayPal in transaction volume, Invesco launching Bitcoin Exchange traded product in Europe etc are some of the recent news impacting Bitcoin trading sentiment.

Ethereum’s (ETH) current price is $4,686.81, versus $4,274.74 on previous Thursday. Ethereum has gained 1.3 percent overnight and 11.1 percent in the past week. Meanwhile, reports indicate that Kelly Intelligence is pursuing an Ethereum Futures ETF with the SEC.

Third-ranked crypto Binance Coin (BNB) is trading at $644.82 and has surpassed the $603.73 level as on November 25. BNB, the cryptocurrency that powers the Binance ecosystem is trading 7 percent below its all-time-high of $690.93.

Solana is now trading at $224.63 versus $206.25 on Nov 25. Grayscale Investments has announced the launch of a Solana trust. The coin has surged almost 11250 percent in the past year.

Cardano (ADA) has mostly traded below the $1.63 level versus the Nov 25 level of $1.65. It is now hovering near $1.60. ADA has lost 1.37 percent in the past week amidst news of delisting of ADA for U.S. users from the eToro crypto exchange citing regulatory concerns.

XRP is at $1.01, a tad below Thursday’s level of $1.03 amidst large wallet transactions and sales.

Polkadot at $37.82 is trailing Thursday’s level of $38.46.

Meme-coin Dogecoin has surpassed the $0.2163 level clocked a day before the Black Friday rout. It is currently trading at $0.2142. Dogecoin core upgrade related issues had recently led to Binance limiting Dogecoin withdrawals. The capability has since been restored.

Avalanche has beaten Thursday’s price of $122.65 by surging to $127.33. It is currently at $123.53.

Meme-coin SHIBA INU also beat Omicron blues by heading to $0.00004611 versus $0.00003977 before the Friday crash. 69 percent of the holders are in-the-money at current prices.

Gold Futures (February settlement) is currently trading at $1791.90, almost close to the level of $1792.40 on Thursday. The yellow metal has shed much of its safe-haven leap to $1819 since Friday.

Crude Oil Brent Futures is in deep losses at $71.19 versus the pre-Omicron price of $82.22. Dampened demand outlook had caused the Brent futures to drop to a low of $69.41 from a high of $83 in the past seven days.

Safe-haven demand in the Yen had caused the Dollar Index, which measures the strength of the U.S. Dollar against a basket of 6 currencies to plunge from the multi-month high of 96.77 on November 25 to 95.52. The Dollar Index has since recovered in the backdrop of hawkish comments from the Fed Chief and is currently at 95.94.

The DJIA closed trading on November 24 at 35805.17 and slipped subsequently to a fresh low of 34426.68. At close of trading on November 30, the index was at 34484.18.
The S&P 500 which was at 4701.46 at close of trading on November 24, slipped further to 4560. At close on November 30, the index stood at 4567.

Around 25 of the top-100 ranked cryptocurrencies are in positive territory both in overnight and weekly basis.

With the U.S. Federal Reserve retiring the word ‘transitory’ from Inflation descriptions, anxiety regarding the stickiness of rising prices has returned to the center stage. While inflation management warrants a sucking out of excess liquidity, the emergence of a highly transmissible virus variant and the response required could exert pressure on both inflation management and recovery management.

The position of cryptocurrencies as an inflation hedge would essentially be juxtaposed within this dilemma. Cryptos may need to demonstrate its inflation-hedge- effectiveness in this moment of reckoning.

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