Friday's sell-offs could be the beginning of a new wave of uncertainty gripping the markets.
Bitcoin plunged on Friday, along with the stock market, following the discovery of a new coronavirus variant in South Africa.
There are fears that the strain is more transmissible, and that it could offer greater levels of resistance to COVID-19 vaccines.
Although just 59 cases of this new variant have been confirmed so far, infection rates in South Africa have surged in recent days — and scientists fear this strain could be responsible for a large number of them.
With the U.K. moving quickly to restrict flights from six African countries, equities tumbled sharply amid fears of fresh disruption to international travel… and the prospect of further lockdown restrictions.
BTC, which has seen an increasing correlation to stocks of late, also suffered — tumbling from $57,750 to $54,750 in under an hour.
The world's biggest cryptocurrency has suffered a dramatic reversal of fortunes, not least because it closed Thursday above $59,000.
A number of analysts have admitted that BTC's pullback took them by surprise — and it's a classic example of an unexpected news event sending shockwaves through the crypto market. To make matters worse, Bitcoin had already been showing signs of weakness.
Some influencers have drawn parallels to the crash seen in March 2020 when a number of countries went into lockdown for the first time.
What Now?
Bitcoin is now coming perilously close to losing its $1 trillion market cap.
Even before news of this new coronavirus strain had emerged, analysts had stated that BTC could still fall to $52,000 or $53,000 and remain in a bull cycle.
But given how it will take many weeks to establish how serious this new strain is, and whether it can be contained, Friday's sell-offs could be the beginning of a new wave of uncertainty gripping the markets.
And this, when combined with the other headwinds facing BTC right now, could derail hopes of new all-time highs and a surge to six-figure territory in the first quarter of 2022.
