Bitcoin slides, metaverse coins hammered as fears about new COVID variant drive investors to dump crypto

Covid-19
covid-19 Andriy Onufriyenko
  • Bitcoin lost 8% Friday to touch its lowest level in two months, as cryptos fell across the board.
  • The discovery of a new, potentially vaccine-resistant COVID-19 variant drove investors to dump riskier assets.
  • Metaverse-linked coins plunged, reversing a recent rally, as sand dropped 4.2% and mana lost 10.8%. 
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Bitcoin, ether and metaverse-linked coins mana and sand were all knocked down in a broad-based crypto sell-off Friday as worries about the impact of a new COVID-19 variant prompted investors to sell riskier assets.

Leading cryptocurrency bitcoin fell 7.5% in 24 hours to hit $US54,079 ($AU75,698) at 08:50 a.m. ET, according to CoinMarketCap data. But it was paring losses logged earlier, when it dropped to $US53,625 ($AU75,063) — its lowest level since October 10. The token is now on track for its biggest one-day drop in two months.

Scientists in South Africa said Thursday they had detected a new COVID-19 variant, number B.1.1.529, that could be more transmissible and more resistant to current vaccines. In response, the UK suspended flights from six southern African countries and the EU said it is considering a similar flight ban.

The World Health Organization plans to hold a special meeting on the situation Friday, having already warned about the surge in global coronavirus cases earlier in the week.

The moves spurred fears about new anti-pandemic restrictions and their impact on economic growth, which rattled global stock markets as investors sought shelter in less risky assets. That tone was reflected in crypto markets, analysts said.

“Today’s move shows that digital assets are susceptible to risk aversion hitting traditional markets,” Freddie Evans, sales trader at digital asset broker GlobalBlock told Insider in an emailed note. 

“We have seen major global indices and other risk assets being hit over concern around the emergence of a new Covid variant in South Africa, which has in turn impacted bitcoin, causing $US300 ($AU420) million to be liquidated within one hour,” he said.

Meanwhile, ethereum’s native token ether sank 9.5% in 24 hours to $US4,027.06 ($AU5,637), but was also pulling back from a bigger loss. Earlier, it fell to $US3,933 ($AU5,505), its lowest level since October 24. 

Among altcoins, solana’s sol was down 10.8%, polkadot fell 12.5%, and cardano’s ada lost 9.6% on the last 24 hours. As for meme coins, dogecoin shed 8.2%, while shiba inu fell 1.6%, according to CoinMarketCap data.

Metaverse-linked tokens also took a hit, coming off gains logged this week on the back of positive news such as digital property selling for millions of dollars. Gaming platform Sandbox’s sand token fell 2%, while virtual real estate provider Decentraland’s mana token dropped 6.3%, according to CoinMarketCap. 

Despite the across-the-board declines for cryptocurrencies, not all market watchers were downbeat about the outlook for prices.

“For us at 21Shares, the fundamentals of the crypto verticals have not changed. We see the pace of innovation keeps moving forward and at an accelerated level,” Eliézer Ndinga, research lead at the digital asset manager, said.