After the discovery of a new, potentially vaccine resistant coronavirus variant, investors dump riskier assets for the perceived safety of bonds, the yen and the dollar, the price of virtual currency fell over nine per cent on Friday.
The largest digital currency, bitcoin fell by as much as 9.2 per cent to $53,551, its lowest since October 10. The second largest criptocurrency ether fell over 13 percent to its lowest in a month as investors ditched cryptocurrencies.
Its 13 year life has been plagued by extreme volatility and was on track for its biggest one-day drop since Sept. 20. It has slumped by more than a fifth since hitting a record high of almost $70,000 earlier this month.
Scientists said the coronaviruses variant, detected in South Africa, Botswana and Hong Kong, has an unusual combination of mutations and may be able to evade immune responses or make it more transmissible.
The spread of the variant especially to other countries could cause investor appetite to grow further, said Yuya Hasegawa, who is on the Tokyo-based Bitbank. The market will brace for further loss if BTC's upside is limited. More large investors adopted cryptocurrencies, with many drawn to its purported inflation-resistant qualities, which hit an all-time high of $69,000 earlier this month.
Record low or negative interest rates have heightened the draw of the digital token on the promise of quick gains. The volatility of the digital currency has resulted in questions about its suitability as a stable store of value.
The price of ether is down almost 20 per cent from its record high on November 10.