Big and small cryptocurrencies drastically fell as Black Friday sales began, amidst fears over a new strain of Covid-19.
This year’s Black Friday sales began with cryptocurrencies suffering a sharp price fall, prompted by fears over the announcement of Omicron, a new, heavily mutated Covid-19 strain found in multiple countries. Among the cryptocurrencies are Bitcoin, Ethereum, Doge Coin, Cardano, XRP, and Solana. Bitcoin, the biggest crypto currency with around 21 million in circulation, fell below $55,000; the week before, it had been fluctuating between $55,000 and $60,000 after reaching its peak price of $69,000 on November 10th.
Opinions are mixed on this recent event: on one side, there are concerns about the market’s volatility and its future. Russ Mould, investment director at AJ Bell, has stated “today has been renamed Red Friday after the color of share price screens as stocks slump globally…” in emailed comments to Forbes. Alex Kuptsikevich, a senior market analyst from the broker company FxPro, has reiterated the same uneasiness, highlighting that prices are vulnerable to broad market movements.
Nonetheless, fears of possible increased regulations has also been a factor dragging down the crypto market. An aspect that distinguishes cryptocurrencies from other =– is the lack of a centralized system (a third party, such as a bank) overlooking transactions. Yet, several countries have set out possibilities of increasing regulations. The United States, for instance, has included provisions in its new Infrastructure Bill which could have crypto brokers or exchanges declare names and addresses of their customers, as well as tax requirements and gains on businesses or exchanges that are receiving more than $10,000 in cryptocurrency value. Similarly, India has discussed introducing regulation legislation where it would prohibit private cryptocurrency holdings. Meanwhile, China, one of the biggest markets for crypto, has cracked down on it since 2013 when it banned the use of digital currencies. The crackdown intensified in September 2021 when it made bitcoin mining and all transactions illegal.
However, other investors and experts are confident that this will be a temporary occurrence and instead focus on the silver lining. Bitcoin has seen interest from investors seeking to shield themselves from inflation that has been globally rising in recent months. According to Nigel Green, crypto investor and chief executive of DeVere Group, “This [bitcoin price crash] will be short-lived, with crypto markets likely to rebound in the near-term as investors once again focus on the heightening global inflation fears.” He even notes that the parallel movements between the traditional and crypto market indicate that these digital assets are now mainstream.
Although Black Friday sales began with shaken markets, investors stay confident that prices will recover even though they may be bumpy in the short road.