Due to the advent of the Omicron version, investors have switched away from riskier assets such as bitcoin. According to Lou Kerner, partner of BlockChain Co-Investors, ESG investors are also worried about energy consumption in cryptocurrency mining.
According to Brian Kelly, CEO, and creator of digital currency investment firm BKCM, “several macro funds that use bitcoin as a pro-cyclical inflation hedge” gained ground in December.
Influence Of Climate Over Cryptocurrency
According to investors and experts, the increasing frequency of Covid omicron incidents in the United States is the primary cause for the bitcoin market’s recent decline. According to investors and experts, the increased frequency of Covid omicron occurrences in the United States is the primary cause of the present slump.
After discovering the omicron version, investors reassess their exposure to risky assets. Ethereum is up more than 400 percent in 2021, but it is on track to have its worst month since March 2020.
Bitcoin is on course to double the S&P 500 this year, while ripple has increased by more than 200 percent, while both are down double digits this month.
“With the launch of omicron and the faltering US economy, a lot of macro funds that use bitcoin as a pro-cyclical inflation hedge profited in December,” Brian Kelly, CEO of Kelly Capital Management, said and founder of digital currency investment company BKCM, told CNBC.
What Exactly Is A Cryptocurrency?
It is a kind of electronic money that does not depend on central banks or other trustworthy third parties to authenticate transactions or generate new currency units. Rather than that, it uses encryption to verify transactions on a blockchain, which is a decentralized ledger.
Right now, that term may sound a little confusing. However, after this review, you will no longer need a decryption key to comprehend cryptography.
Thousands of distinct cryptocurrencies exist, each with its own set of values. Bitcoin (CRYPTO: BTC), the first cryptocurrency, was created in 2009 by a programmer under Satoshi Nakamoto’s pseudonym.
Nakamoto describes blockchain for the first time in a white paper titled “A Peer-to-Peer Electronic Cash System,” published in 2008. Blockchain technology enables cryptocurrencies to behave similarly to government-issued (fiat) currencies without requiring a central bank or a trusted third party.
Why Is It Called “Blockchain”?
On a cryptocurrency network, a block is a collection of transaction data. Person A gave this amount of bitcoin to Person B, and Person X got this amount of cryptocurrency from Person Y, and so on.
A block contains a reference to the block that comes before it. The blocks form a chain, with regards to previous blocks connecting them. To modify a block in the ledger, a hacker would have to replicate the whole chain of blocks that follow it since failing to do so would result in a chain of invalid references that the bitcoin network would reject.
Fluctuation Of Price Of Cryptocurrency
After falling below $47,000 on Wednesday, Bitcoin’s price climbed marginally on Thursday. On Thursday morning, bitcoin was trading between $47,000 and $48,000.
Bitcoin hasn’t recovered from a severe drop sustained on December 3 after beginning the month just short of $60,000. Since then, its price has fluctuated between $45,000 and $52,000. Following a rise of over $50,000 last week and over the holiday weekend, prices have dropped this week, bringing it back to where it has been for most of the month. This week, the cost of bitcoin has fluctuated between $46,000 and $52,000.
Despite retreating from its most recent all-time high, Bitcoin’s current price marks a significant increase from the low $40,000 area observed in September. Many analysts believe Bitcoin’s price will increase beyond $100,000 before the end of the year.
Ethereum’s price topped $4,850 shortly after Bitcoin’s most recent all-time high, establishing a new all-time high. Following the recent peak, Ethereum has also seen significant ups and downs.
The Takeaway
According to investors and analysts, the increasing number of Covid omicron cases in the United States is the main reason for the December decrease in bitcoin prices. Ethereum is up more than 400 percent in 2021 with the introduction of the omicron form, but it is on course to experience its worst month since March 2020 as investors reassess their exposure to risky assets. While bitcoin is on course to double the S&P 500 this year, ripple has increased by more than 200 percent; both are down double digits this month.
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