- A new COVID variant has caused global markets to sell off, with crypto no exception
- $238 billion was wiped off the crypto markets overnight as Bitcoin dropped to $54,350
- The drop means that the Bitcoin stock-to-flow model may have been invalidated
A new South African COVID variant has spooked global markets, as $238 billion was temporarily wiped off the cryptocurrency market and Bitcoin hit $54,350 overnight. It wasn’t just the cryptocurrency markets that felt the effects – all the major traditional markets felt the pain, as did the U.S. Dollar Index, as world fears of another series of damaging lockdowns grew. The price action saw $265 million worth of liquidations across the crypto markets as those who were in long positions were forced out of their trades.
Bitcoin Follows European Markets Down
Bitcoin had spent this week recovering nicely from its drop to $56,000, hitting $59,000 late yesterday while plenty of alts looked to be in promising positions. The new COVID variant however put paid to any positivity, with Bitcoin following European markets in a downtrend as they opened this morning. U.S. markets are predicted to follow when they open this morning.
Bitcoin found a floor at $54,350, but this could well turn out to be temporary if there is anything like a repeat of the March 2020 crash in traditional markets. The new COVID variant, B.1.1.529, was first identified in South Africa and is thought to be the worst yet seen, which has naturally worried shareholders about another series of lockdowns worldwide.
COVID Mutation Infects Stock-to-Flow
Even if it recovers, the Bitcoin price drop looks set to mean that the stock-to-flow model has been invalidated, unless the price can somehow hit $98,000 within five days, although its creator, Twitter user Plan B, said that it still remained intact:
Floor model $98K Nov close will probably be a first miss (after nailing Aug, Sep, Oct). S2F model not affected and indeed on track towards $100K. pic.twitter.com/QO3bRUoGo3
— PlanB (@100trillionUSD) November 25, 2021
The next support after $54,000 is $51,000-$52,000, which bulls will hope will act as a huge attraction to big buyers.