Major cryptocurrencies slumped on Thursday morning with bitcoin continuing to hover under a key level of $50,000 (£37,357) as worries about the new COVID Omicron variant continues to spook the wider market. Investors appear to be shifting focus to smaller crypto assets, which saw an uptick in price.
Bitcoin (BTC-USD) was down 1.8% at the time of writing to trade at $48,310. The price of bitcoin had surged earlier in the week, crossing $49,000 but failing to hit $50,000. And its down about 30% from its all-time high of roughly $69,000, which it hit last month.
Ethereum (ETH-USD), the second biggest crypto by market cap, fell 2.6% and was trading at $3,917.
“Cryptocurrencies have remained turbulent in the recent past with the most populous crypto-asset bitcoin continuing to hover below the mark of $50,000,” Kunal Sawhney, CEO at Kalkine Group told Yahoo Finance UK.
“The persisting uncertainty in financial markets have severely dismantled the growth prospects for most risky assets including some of the tech stocks and cryptocurrencies,” he added.
But he noted that while bitcoin, ethereum, and so-called ethereum killer solana (SOL1-USD) collapsed between 2% to 5% on Thursday, cryptocurrencies including ripple (XRP-USD), cardano (ADA-USD), polkadot (DOT-USD), dogecoin (DOGE-USD) and shiba inu (SHIB-USD) jumped 1% to 5%.
He believes there is a “clear shift” – investors are betting on smaller crypto-assets and emerging coins as they believe they are better equipped for multi-fold gains in the future as compared to bitcoin and ethereum.
Meanwhile Naeem Aslam, chief market analyst at AvaTrade, said “bulls are only likely to return if bitcoin breaks the important price level of $50,000 and stays above it.”
He said 2021 has been a landmark year for cryptocurrencies, with the blockchain space attracting a significant amount of capital thanks to the launch of exchange traded funds and greater awareness among investors.
Financial products that track the performance of cryptocurrencies have more than doubled from 35 at the end of last year to 80 now. And assets in the digital sector have hopped from $24bn at the beginning of the year to $63bn.
But he said crypto markets have been extremely volatile, with bitcoin falling roughly 56% between April and June and then reaching its all-time high in November.
Despite the volatility, he said inflows to the crypto sector have been very consistent, and institutional investors are also showing increased interest in the space.
He had earlier said he expects the price of bitcoin to surpass $50,000 in January because historical data shows that the price typically rises 10% in the first month of the year.
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