Crypto

With the Focus on Omicron and the Fed’s Powell Speech, Bitcoin Reaches $58k

Bitcoin

Bitcoin has gained back some of its confidence, following signals of a risk reversal in traditional markets. The cryptocurrency’s immediate prospects are still dependent on the potential influence of a recently discovered coronavirus variant known as Omicron on the Federal Reserve’s monetary policies.

At press time, the leading cryptocurrency by market capitalization was trading near $57,300, up 7.3 percent from its low of $53,359 late Sunday. During the Asian hours, prices reached a high of $58,270.

The SP 500 futures were up 0.9 percent, tracking increases in the pan-European Euro Stoxx 50 index and other risk assets such as the Australian dollar and crude oil.

Early Monday, buyers made a reappearance, citing reports from South Africa that Omicron patients had “very minimal symptoms.” The revelation of a reportedly vaccine-resistant COVID-19 strain emerging from South Africa on Friday sent bitcoin and risk assets plunging, raising the possibility of economically costly lockdowns. The Omicron variant has been designated as a variant of concern by the World Health Organization (WHO).

“At the moment, bitcoin is mostly being lumped in with other risk assets,” said Matthew Dibb, COO, and co-founder of Stack Funds. “We’ve seen some buying in big cryptocurrencies following Friday’s equities drop, but it’s too early to determine whether it will continue.”

Market participants agree that if asset values fall because of anticipated lockdowns in major economies, central banks and governments will soon respond with further support.

On the 26th day of November 2021, Alex Krüger posted on Twitter. Politicians and markets appear to be overreacting to this new strain, which does not appear to be a game-changer. If I’m incorrect (which is quite likely) and it leads to lockdowns, governments will be forced to reinstate subsidies and central banks will become more dovish, which will be bullish for tech and crypto after the initial panic.

The Federal Reserve has stated that it will begin gradually dismantling its $120 billion per month asset-buying program. According to Goldman Sachs, the central bank’s so-called taper might begin in January.

Traders will be paying particular attention to Federal Reserve Chairman Jerome Powell’s appearance to the US Senate on Wednesday, which will be headlined “Coronavirus and CARES Act.”

If Powell guarantees markets of infinite support in the case of a severe epidemic, Bitcoin might restart its upward trend. The risk linked with Omicron, according to WHO, is extremely high, and the newly discovered variety is “highly divergent” and expected to spread quickly.

While Powell is expected to speak at an event introducing the New York Innovation Center on Monday at 8:03 p.m. UTC, he is unlikely to address the coronavirus, inflation, or interest rates.

On the hourly chart, Bitcoin’s comeback has assumed the appearance of a bull flag. A breakout might hasten the rebound, possibly leading to a re-test of the $60,000 level.

The Author

Samuel Adeshina

Samuel is a financial reporter whose interests include blockchain, market, business, insurance, and Crypto to provide relevant information to all interested.