Cryptocurrency Price Check: Bitcoin Bounces Back After Omicron Scare

Cryptocurrency prices were climbing out of the basement Monday following a stunning tumble sparked by fears tied to the latest Covid-19 variant.

Bitcoin was up nearly 5% to $57,055 at last check, while Ethereum was up 5.3% to $4,316.

Prices took a beating Friday, along with the rest of the market, amid concern about the omicron variant. But they rebounded as investors focused on forthcoming comments from Federal Reserve Chairman Jerome Powell.

Micah Carnahan, crypto expert and writer with Finder, said cryptocurrencies were not exempt from the fear-induced selloff. The new variant caused a brief panic during the Black Friday weekend, with nearly $200 billion of digital assets sold on the news.

“Bitcoin is leading the market back from the depths of despair, however, with a sharp bounce coming off of key support levels,” Carnahan said. 

“Having fallen near $53,000 over the weekend, bitcoin has since gained roughly 5% as the omicron panic fades. Ethereum has followed suit.”

He noted that the largest gains seen in the past week came from the gaming metaverse, with the Sandbox and Gala both experiencing 90%+ price increases.

“These price increases reflect growing interest in immersive 3D virtual worlds,” he said. “Attention in the metaverse was bolstered by Facebook  (FB) – Get Facebook, Inc. Class A Report (which recently changed their name to Meta Platforms) when they announced plans to spend more than $10 billion this year developing their own metaverse division.” 

Meanwhile, Winston Ma, managing partner at CloudTree Ventures, said NFTs and the metaverse have been gaining momentum in China, with a growing list of Chinese firms openly embracing them.

“NFT prices are skyrocketing,” said Ma, Author of “The Digital War – How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace.” 

“For example, a digital torch for the Asian Games, launched by Alibaba-affiiated  (BABA) – Get Alibaba Group Holding Ltd. Sponsored ADR Report Ant’s blockchain platform AntChain in September, was originally priced at 39 yuan (US$6.10), but private chat groups stoked up its value to more than 10,000 yuan, according to Chinese media.”

MA said the Chinese government has not explicitly banned NFTs or the metaverse, leaving related digital-collectible trading out of China’s ongoing crackdown on crypto mining and trading. But the window appears to be closing, as China’s state media, The People’s Daily newspaper, last week questioned whether NFTs were hype and fraud.

David Lesperance, managing partner of immigration and tax adviser Lesperance & Associates, said India is following in China’s footsteps and has decided to ban all nongovernment cryptocurrencies to make way for a sovereign e-rupee. 

“Those Indians who hold cryptocurrencies would be wise to examine the experience of their Chinese counterparts and act quickly and decisively to protect the future of their crypto holdings,” he said.

Lesperance said the U.S. government has laid out a roadmap of how it will require banks to deal with such issues as custody, capital standards and crypto-backed loans.

“Interestingly in the area of crypto-lending, borrowers are discovering that the rates and ‘loan-to-value’ ratios offered by the major exchanges are ‘retail pricing,'” he said.

“Thrifty borrowers are discovering that there are significantly better ‘wholesale’ terms available.”

Whether this will survive after the U.S. government is done regulating is anyone’s guess, Lesperance added.