The cryptocurrency market waiting for the Omicron variant

Due to concerns about the Covid-19 pandemic, the Omicron variant in South Africa, as well as the Fed’s monetary policy, European stock markets are in decline on Thursday. The same goes for the cryptocurrency market. After a rebound earlier in the week and information about the pandemic crisis, the announcement of the first case of the Omicron variant in the United States has rekindled fear and uncertainty in several financial centers, including cryptocurrencies.

The sky darkens in the short and medium term

The French authorities announced this Thursday morning that the first case of the Omicron variant has been detected in the metropolis. Germany is expected to announce new restrictions on Thursday in response to the new wave, including the possible closure of bars and restaurants. The impact of these measures on Europe’s largest economy worries investors.

The prospect of tightening monetary policy from the Federal Reserve has exacerbated volatility. The president of the Central Bank of the United States, Jerome Powell, reiterated before the committee of the House that he was considering a more rapid cut of the plans of purchase bonds. Investors see it as a prelude to rising interest rates. In fact, these market lows can provide additional support for cryptocurrency prices and allow for long-term price stability and reduced volatility.

Many specialists estimate that the key area in the short and medium term is $ 50,000 per bitcoin. Besides being a psychological price, this is a strong area of ​​battles between buyers and sellers. However, buyers will soon be bolstered by the 150-day moving average, which is currently hovering around $ 49,000. If this support were to turn down, it would be the beginning of a short-term bearish cycle without jeopardizing the long-term bull run cycle that has been going on for many months.

An opportunity to buy and accumulate for some

Despite the recent decline due to current health and economic conditions, cryptocurrencies continue to enjoy some appeal. Since the end of the summer, we have been able to witness a crypto market “rally”, that is, an increase of almost 50% of the total market capitalization. As industry participants provide new services, they also benefit from increased accessibility. These allow cryptocurrencies to get closer to potential users.

Additionally, market investors known as MicroStrategy continued to increase their Bitcoin holdings, Michael Saylor’s company acquired an additional 7,002 Bitcoins worth around $ 414.4 million.

As for Ethereum, the second cryptocurrency on the market seems to want to continue its bull run. Many experts predict that ETH will have crossed the symbolic $ 5,000 mark by the end of the year. During the last weeks, the dominance of ethereum has continued to increase, would it be possible to witness a possible “flipening” (the total capitalization of ethereum exceeds that of Bitcoin)?

Market players seem to believe it anyway given the price reaction in the $ 3900-4000 zone. If the current trend is uncertain due to the resurgence of the global pandemic with the Omicron variant, the end of the year could be turbulent in financial markets. However, if we consider the big picture with the necessary hindsight, these market lows could allow us to take a breather before the continuation of an uptrend during the year 2022.

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