Bitcoin rebounds as Omicron anxiety wanes

Goldman Sachs opts not to amend its growth, inflation and monetary policy forecasts

BTC token                                 
Largest currency recovers lost ground – Photo:Shutterstock
                                

Bitcoin traded up on Tuesday, as crypto markets continued to rebound following Friday’s Omicron-induced sell-off.

Initial Omicron reaction

The world’s first and largest cryptocurrency slumped by 9% on Friday as markets reacted to the World Health Organisation’s declaration that the new strain of the coronavirus, which has caused huge disruption to the global economy over the past two years, was a variant of concern.

In response, the governments of the United Kingdom, United States, Canada, Japan and the European Union, among others, temporarily banned travel from eight African countries where Omicron had been detected.

Within 24 hours, the capitalisation of the total cryptocurrency market sank by more than $150bn to $2.43trn, according to CoinMarketCap.

Fearing further lockdowns and travel restrictions, Brent crude futures suffered their largest one-day drop since March 2020, falling from $82.22 to $72.72 per barrel.

Omicron reappraisal

In the following days, however, the narrative surrounding the variant has shifted from one of immediate panic to a more nuanced consideration.

Dr Angelique Coetzee, chair of the South African Medical Association, said: “Symptoms were very much related to normal viral infection. And because we haven’t seen Covid-19 for the past eight to 10 weeks, we decided to test.”

She added: “Most [doctors] are seeing very, very mild symptoms, and none of them, so far, have admitted patients to surgeries. We have been able to treat these patients conservatively at home.”

Goldman Sachs cautious

Publishing a report on Omicron, Goldman Sachs recognised that it could have sizeable growth effects but could also prove to be a false alarm or less severe than previous strains.

As such, it said: “We are not making Omicron-related changes to our growth, inflation and monetary policy forecasts until the likelihood of these scenarios has become somewhat clearer.”

Having fallen to a near-two-month low below $54,000, bitcoin surged by as much as 9% on the shift in perspective and confidence.

By 12:15 UTC, bitcoin was trading up 2.1% at $58,305.

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