On Friday, bitcoin plunged along with other assets, reaching a seven-week low and officially entering bear market territory.
According to Coin Metrics statistics, the world’s largest cryptocurrency has dropped 7% in the previous 24 hours to $54,572. Bitcoin fell to $53,549 at one time, its lowest level since early October.
Bitcoin has lost 20% of its value after hitting an all-time high of almost $69,000 earlier this month. Bear markets are defined by a 20% or more drop in price from previous highs.
Other cryptocurrencies fell in value on Friday as well. Ether, the second-largest cryptocurrency, plunged over 10% to $4,081, while XRP lost 9% to approximately 96 cents.
Fears about a new, significantly mutated strain of the coronavirus, first found in South Africa, are causing digital currencies to collapse in lockstep with other risk assets.
The World Health Organization held a press conference on Thursday to discuss the new variety, known as B.1.1.529, which is likely to include more than 30 mutations. In reaction, the United Kingdom and other countries have temporarily halted flights from six African countries.
Global stock markets were in free fall on Friday, with European equities likely to have their worst day in almost a year and U.S. stock futures falling dramatically.
With U.S. Treasury rates falling dramatically, investors are fleeing risky assets for the relative safety of Treasuries. Bond yields are inversely proportional to bond prices.
Proponents of Bitcoin have referred to it as “digital gold,” a reference to the yellow metal’s position as a “safe haven” asset.
Cryptocurrency investors argue that the virtual currency serves as both a store of value and a hedge against inflation.
It’s worth mentioning that bitcoin is a very volatile asset, with price movements of more than 10% occurring on a single day.
(Adapted from MSN.com)