Bitcoin (BTC) fell almost 20% from the all-time high it reached earlier this month, as a potentially dangerous new version of the coronavirus prompted traders all around the world to sell risky assets.
On Friday, the value of the world's biggest cryptocurrency plunged as much as 9% to $53,552. Ether, the second-largest digital currency, fell by more than 1%, while the broader Bloomberg Galaxy Crypto Index fell by as much as 7.7%, according to the Bloomberg data.
As a result of the discovery of a new variety in southern Africa, liquidations erupted throughout global markets, with European equities suffering their worst day since July and major U.S. share indexes also plunging.
Bitcoin was not exempt from the devastation, despite the fact that it is increasingly being seen as a hedge against financial-market turbulence by many crypto fans.
As a result, even as Bitcoin has achieved more general appeal, the cryptocurrency is still subject to dramatic fluctuations in value.
Meanwhile, gold, a classic safe-haven asset, rose as much as 1.5% on Friday morning, although the precious metal has still lagged Bitcoin for the year so far this year.
Despite the turbulence caused by the variation news, it was not the only factor impacting Bitcoin's value. A number of cryptocurrency roadblocks were identified by analysts heading into this week, including the United States' tax-reporting requirements for digital currencies, China's tightening regulatory environment, and India's plans to introduce a new bill that would effectively ban most private cryptocurrencies.
Because of the excitement around the launch of the first exchange-traded fund tied to bitcoin futures in the United States, bitcoin has been under pressure since it reached a record high of about $69,000 earlier this month.
At the moment, it is trading close to its 100-day moving average of $53,940, which functioned as a level of support during the stock's late-September decline.
In a report published Friday, Katie Stockton, creator of Fairlead Strategies LLC, said that two consecutive daily closes below the $52,900 mark would raise the likelihood of a steeper decline until the next support level around $44,200. However, she asserted that this is not a valid reason to sell.
For the time being, Bitcoin's reversal is really a sideshow to the worldwide market falls on the new variation known as B.1.1.529, which are occurring as policymakers hurry to retool cross-border travel regulations. More than 85% of the value of the biggest token has increased so far this year.