Bitcoin dropped below $55k amid COVID variant B.1.1.529 concerns.
The cryptocurrency seemed set for a breakout above $60,000 after Thursday's rise, but COVID variant fears changed the market mood.
The financial markets were in red on Friday as concerns over a new COVID variant seemed to have hurt risk appetite.
While Bitcoin was trading 6.7% lower on the day near $55,000, the S&P 500 futures were down 2.3%. The MSCI Asia-Pacific index had slipped 1.8%, and the commodities complex was also down, with oil lower by more than 2% on both sides of the Atlantic. In the meantime, safe-haven assets like the Japanese yen and U.S. Treasuries were making gains.
The classic risk-off move came directly after reports of a new COVID variant identified in Botswana, South Africa, and Hong Kong, which might affect vaccine protection. If these fears worked out as expected, many countries might need to once again introduce financially painful lockdown restrictions.
There is a lot we do not understand about this variant, Richard Lessells, an infectious disease doctor at the University of KwaZulu-Natal in Durban, South Africa, told multidisciplinary science journal Nature. The mutation profile gives us concern, but now we need to do the work to understand the meaning of this variant and how it affects the response to the pandemic.
Bitcoin's decrease amid risk avoidance in traditional markets suggested the cryptocurrency had yet to find acceptance as a safe-haven asset.