Huge crash of Crypto tokens amid omicron scare
About $2.4 billion of crypto exposure, both long and short, was liquidated on Saturday, the most since September 7, according to data from Coinglass.com.
image for illustrative purpose
Hyderabad About $2.4 billion of crypto exposure, both long and short, was liquidated on Saturday, the most since September 7, according to data from Coinglass.com. Markets have also been jittery with all the uncertainty around omicron, with cases now appearing in many countries. It's hard to say what that means for economies and markets and hence the uncertainty.
Bitcoin plunged along with other cryptocurrencies, indicating financial markets sentiment of risk aversion that is sweeping across. The largest digital token fell as low as $42,296 before recovering some loss. It was trading at about $47,600 as of 1:50 p.m. in Singapore on Saturday, a drop of about 11 per cent.
Ether, the second-largest crypto token, fell as much as 17.4 per cent before trimming the retreat to about 10 per cent. The overall crypto sector has shed around a fifth of its value, sliding to $2.2 trillion, according to tracker CoinGecko.
The swings in cryptocurrencies happen amid a volatile period for financial markets. Rising inflation is forcing central banks to tighten monetary policy, threatening to reduce the liquidity tailwind that lifted a wide range of assets.
The omicron variant has also led to risk aversion over concerns about what it might mean for global economic reopening. Global stocks are down more than 4 per cent from a record in November, while safe assets like Treasuries have rallied.
Bitcoin, known for its volatility, has shed about $21,000 since hitting a record on November 10. But it's still up more than 60 per cent this year, a return that exceeds many other assets -- and El Salvador's President Nayib Bukele said the country had again bought the dip, adding 150 coins. The nation this year adopted Bitcoin as legal tender.
As usual, since crypto traders deploy leverage it results in increasing sell orders and liquidations, opined Antoni Trenchev, co-founder of crypto lender Nexo. "We should find support around $40,000 to $42,000 and then rebound in line for a year-end rally. If that does not hold, we might see the July lows of $30,000 to $35,000," says he.
