The headlines of the new Corona Virus variant thrashed confidence in the majority of the cryptocurrencies. Which were already enduring increased sell-off pressure from the past couple of weeks.
However, the global crypto space plummets to $2.44 trillion with a 7.95% loss in 24 hours. Besides, chief cryptocurrencies Bitcoin, Ethereum, and Solana are down by 7.2%, 9.4%, and 10.28% followed by the FUD of the new Covid variant.
How New Strain Of Covid is Interlinked to Crypto Crash?
While crypto space was on its way to finding a positive pace, confirmation of the new corona variant by South African scientists resulted in the market crash. The new variant could probably be easily transmissible.
In addition, followed by the surge in cases, European countries are set to impose yet another round of lockdown restrictions. Moreover, Britain has strictly enforced a ban on travel to other nations for a couple of weeks.
Although the influence on people’s life has not yet been discovered, the re-establishment of lockdowns is likely to damage global financial activity.
If we keenly look at the past, cryptocurrencies remained almost immune to Covid with only 20 to 25% of correction, while cases were at their peak. Later, the move was historical, the prices soared to their maximum as people started using cryptos as a hedge against financial crisis.
The recent panic selling would be a greater opportunity for smart buyers. On the other hand, crypto analyst Micheal Van De Poppe has been optimistic about the future potential of the crypto market.
In his recent tweet, he addressed on market crash and emphasized the lengthening bull cycle, and proclaimed the present dip as the best buy opportunity. As per him, the recent drop would be transient, and the space would undergo sustainable growth in the coming days.
However, the space has seen a tremendous uptrend since 2020 and specifically in 2021. The majority of the traders and netizens argue that a crypto market bubble has been created over the year. As prices of chief cryptocurrencies seem to be out of proportion, holding overvalued market cap. In the event of bubbles like this, woefully, traders might fall to FUDs and end up selling their assets in panic.
Collectively, the global cap was at its nascent stage of development during the covid crisis in 2020. As and when adoption started to rise, traders utilized this tool as a hedge against financial crises such as inflation in such worst conditions.
However, no one could exactly determine whether trend reversal is happening now? Or whether early traders are taking out their profits to fight the potential lockdown ahead? Or The short dip would be a greater sign for the next step adoption? Or Whether dip is just a manipulation of large whales? All these questions make rounds in the space, however, while investing in such worst economic conditions thorough research is mandatory.