- Bitcoin and ether bounced back on Monday, recovering somewhat after Friday’s steep sell-off.
- A small decentralized reserve token known as “omicron” surged as focus on the new COVID-19 intensified.
- South Africa detected the “omicron” variant of Covid-19 last week, initially sparking a sell-off in crypto.
Cryptocurrencies staged a sharp recovery on Monday, bouncing back from the steep sell-off late last week, when the “Omicron” variant of COVID-19 emerged, spooking investors and pummelling financial markets. Meanwhile, a mysterious token with the same name as the new variant surged in value.
Bitcoin rose 4.8% in 24 hours to stand at $US57,136.17 ($AU80,214) by 07:52 a.m. ET Monday, having fallen by as much as 8% at one point on Friday, according to CoinGecko. Ether rose 5% in 24 hours to stand at $US4,313.26 ($AU6,055), recovering from Friday’s 11% drop.
The Omicron variant was first detected in South Africa last week. Since then, cases have begun to emerge in a number of countries outside the region and a number of governments including the UK and Israel have scrambled to restrict certain travel. News of the variant on Friday hit risk assets including crypto, as investors rushed for the safety of the likes of gold.
News that the Omicron variant was more transmissible sparked concerns last week. The South African doctor who first spotted the new covid variant, told the BBC Sunday patients who had caught it had “extremely mild symptoms” but more time would need to pass until it is clear how the disease will impact vulnerable people.
By Monday, with still little in the way of hard evidence as to how easily transmissible the variant was, investors reassessed the threat omicron may pose to the economy and edged back into cryptocurrencies and stocks.
“Like gold, Bitcoin is being used as a hedge against global uncertainty in the world,” Adrian Pollard, Chief Product Officer to HollaEx, a crypto exchange software company, told Insider.
In the meantime, a little-known decentralized reserve currency named omicron surged by almost 70% on the day and by 900% on the week, as trader focus on the new COVID-19 intensified. According to the developers’ website, the token is backed by a basket of assets that includes stablecoin USDC and is only listed on SushiSwap.
“Omicron is a clear sign of a bubble, and while it might be a good way to make a quick return, it is not a good buying option for the long term investors,” Freddie Evans, Sales Trader at UK based digital asset broker GlobalBlock told insider.
“With the founders of the coin being unknown, it is also at risk of a rug pull, the likes of which we saw with Squid Game coin last month,” he said.
In a rug pull, the developers abandon a project and take the proceeds. The most recent example was the Squid Game token, whose creators ran away with an estimated $US3.38 ($AU5) million after having pumped the token up.
“We have a list of criteria that we check against for all cryptocurrencies that request for listings. We don’t publish the exact criteria otherwise it will be gamed. Omicron passes the criteria and hence it is listed,” Bobby Ong co-founder of CoinGecko said.
According to its website the omic token already existed before the emergence of the omicron variant last week. CoinGecko has been tracking it since November 11. The coin has a website, twitter account and discord account. But little else is known about it.
“Another risk is associated with the fact that such coins are traded on decentralized exchanges, where no one checks the source of their origin, which means that they can vanish as quickly as they appear,” Lei Wang, Co-founder & CEO of Kine Protocol, decentralized derivatives trading platform, told Insider.
Other more popular altcoins like solana’s sol rose by 7.6%, while cardano’s ada climbed by 3.5%. Metaverse tokens such as Decentraland’s mana rose 5% and Sandbox’s sand jumped 8% Monday.