[ad_1]
Japan has banned spectators from its own Olympics due to concerns over the new Covid Delta variant ravaging the world — a strong indicator that other countries could also take drastic action soon and the global economy — including cryptocurrency markets — could be in for further disruption.
The traditional markets have already begun to react, with S&P 500 and Nasdaq indexes falling from record highs. There has been a knock-on effect to cryptocurrency as well as traders shed riskier assets — Bitcoin price and major altcoins all took hits in the overnight trading session.
“Regarding the Delta variant for Covid, the impactful news was Japan potentially banning fans from attending the Olympics, it suggests that government officials in developed countries are taking this seriously,” said Justin d’Anethan, head of exchange sales at EQONEX, a digital assets firm, in an interview with Forkast.News. “So it’s not just about Japan… It’s globally. Maybe governments are going to have to take drastic actions. And, of course, that is going to have an impact on markets.”
The traditional markets reacted immediately to Japan’s announcement yesterday, with investors selling riskier assets like equities and buying bonds, which are considered safer. Similar sentiments were on display in the cryptocurrency markets. Despite Bitcoin price falling around 3% from US$33,450 to US$32,250, Bitcoin dominance rose nearly 2%, from 44.6% to 45.9%, suggesting cryptocurrency traders were also seeking the safety of the digital gold.
“Everybody’s bearish in traditional markets, so probably they need to free up cash or they feel like they don’t want to be taking a risk in crypto assets as well and end up selling,” D’Anethan said.
Along with Bitcoin’s price drop, major altcoin prices fell even more drastically. Ethereum (ETH) price plunged over 5%, Polkadot (DOT) fell around 8% and Solana (SOL) dropped around 9%, losing ground in market cap ranking and falling from 12th to 13th position on CoinMarketCap.
Jim Cramer blames politicians for Delta disruption
CNBC’s market analyst Jim Cramer did not hold back on Thursday’s segment of Mad Money when he slammed world leaders for failing to react in time to halt the spread of the highly contagious Delta variant of Covid-19. First discovered in India, the Delta variant now spreading rapidly across the globe has become the dominant strain affecting people in the U.S. Although America’s vaccination rates are much higher than most other countries, Delta-related outbreaks in other parts of the world — particularly where vaccination uptake is low — could be a sign of much heavier market disruption to come.
“I put this sell-off squarely in the laps of politicians around the world because we right now have a failure of global leadership,” Cramer said.
While Cramer conceded that the U.S. was doing a better job than many other nations in its vaccine roll-out, he believes the government’s decision to make vaccination “voluntary” was a bad move.
“If we get the Covid variants under control by forcing people to get vaccinated, I think bond yields and the stock market will start rising again,” Cramer said.
China cracks down on crypto… again
Another factor depressing cryptocurrency prices is China’s crusade against Bitcoin mining, crypto trading and now, stablecoins. A senior official of the People’s Bank of China reiterated concerns over cryptocurrencies yesterday, saying digital currencies such as Bitcoin and stablecoins had become speculative tools that could threaten financial security and social stability.
Fan Yifei, a deputy governor at the People’s Bank of China, said in a briefing that stablecoins, in particular, could bring risks and challenges to international monetary mechanisms and clearing systems.
“We’re quite worried about this issue, so we’ve taken some measures,” Fan said, without detailing what those measures were.
Fan also said China’s central bank was making efforts to push ahead with the testing of the digital yuan, and that it had recruited 10 million users for invitation-only trials.
Eqonex’s d’Anethan said that yesterday’s announcement by China’s central bank no doubt cast a pall over the already-floundering crypto market.
“Chinese officials reiterated their concerns about cryptocurrencies in general and specifically stablecoins,” d’Anethan said. “I think that’s always having an impact on crypto investors. And so, either the traditional markets or the Chinese FUD (fear, uncertainty, and doubt) as it’s called, had an impact on traders.”
Only last month, the central bank of China summoned some of the country’s biggest banks, alongside digital payments giant Alipay, to instruct them to cut off financing sources for cryptocurrency transactions.
Warnings were also issued to citizens in Thailand yesterday regarding the use of cryptocurrency as a payment. Solidifying its stance against cryptocurrency like Bitcoin, the Bank of Thailand declared that it does not support the use of cryptocurrency as a means of payment, likening crypto transactions to “barter trade” as the bank does not consider crypto legal tender.
As the market grapples with the possible incoming disruption of the Delta Covid variant and regulatory crackdowns in Asia, Bitcoin dominance rising essentially signals people are transitioning from altcoins back towards Bitcoin or at least Bitcoin is performing better, relatively speaking, than altcoins.
“Another way of saying that again is altcoins are doing worse than Bitcoin. And indeed, you can see Ethereum, Polkadot, Chainlink, and so on are down between five and seven percent,” d’Anethan said.
At the time of writing, Bitcoin’s price has recovered slightly to US$33,119 and Bitcoin dominance now stands at over 45%, walking back its losses in crypto market dominance seen over the last week.
[ad_2]
