According to investors and analysts, the rise in the omicron Covid-19 variant in the United States was the main trigger for the fall in cryptocurrency prices in December.
Ethereum has risen by more than 400% in 2021, but in the worst month since March 2020 as investors are reassessing their exposure to higher risk assets following the advent of the Omicron variant. We are increasing the pace towards.
Bitcoin is doubling the S & P 500 and Ripple has been more than 200% higher so far, but both are down double digits this month.
“With the advent of Omicron and the slight stagnation of the US economy, many macro funds that use Bitcoin as this procyclic inflation hedge have decided to make a profit throughout December,” said the digital currency. Brian Kelly, the founder of investment company BKCM, told CNBC.
Concerns about ESG investment and energy use have also triggered a recent decline in cryptocurrencies, according to Lou Kerner, a partner at BlockChain Co-Investors.
“From today’s” Proof of Work ” [cryptocurrency] Mining machines are seen negatively by many investment communities because of the energy they consume. However, if you dig deeper, much of the energy becomes energy that cannot be used for other purposes. Compared to the enormous value we are getting from it, the energy I think will be much less worrisome next year. “
Stocks holding or mining cryptocurrencies have fallen significantly from the assets themselves in December. MicroStrategy was down 21% this month, while Riot Blockchain was down 38%. Marathon Digital decreased by 31%. Coins and stocks are closely correlated in the minds of investors, and Kerner sees something changing.
“We are at the forefront of deep understanding by institutional investors in various companies, what they are actually doing, and the economics of business. Most investors worry about mining. Is still difficult. It’s a small part of the market, so few institutional investors spend a lot of time on it. For them, it’s easier to see it as a basket, “Kerner said.
Kelly is bullish on Bitcoin and believes it could reach $ 100,000 by the end of 2022, but also said the emergence of the Metaverse is of interest to investors.
“You’ll see many other coins really work, whether it’s the Metaverse, the game, or the decentralized finance,” Kelly said. “Venture capitalists, new money and funds like me are focused on those early growth opportunities.”