RIYADH: The discovery of a new coronavirus variant, B.1.1.529, may have weighed on Bitcoin, the world’s largest digital currency, but financial experts expect its value to “double over the next 12 months.”
The fall in Bitcoin value should be seen as a major buying opportunity, said Nigel Green, chief executive and founder of deVere Group.
Bitcoin tumbled over 9 percent on Friday, dragging smaller tokens down.
Bitcoin hit an all-time high of $69,000 earlier this month as more large investors embraced cryptocurrencies, with many drawn to its purported inflation-resistant qualities.
Others have piled into the digital token on the promise of quick gains, a draw that has been heightened by record low or negative interest rates.
“The discovery of a new coronavirus variant has rattled global stock markets as it brings in a new wave of uncertainty,” said Green.
“The crypto markets have mirrored the reaction of other financial markets. This underscores how mainstream digital assets have now become, as an increasing number of institutional investors have piled into Bitcoin this year.
“But for this reason, when they temporarily reduce exposure to most risk-on assets, despite the longer-term outlook, they also do the same with Bitcoin. In turn, due to Bitcoin’s mammoth market share, it weighs down the entire crypto sector,” the head of the fintech organization said.
He continued: “However, I think this a knee-jerk reaction from the crypto market. It will move on from this relatively quickly as it did with the delta variant in the summer.”
Bitcoin is often referred to as “digital gold” because like the precious metal it is a medium of exchange, a unit of account, non-sovereign, decentralized, scarce, and a store of value.
“In addition, investors will once again focus on the heightening global inflation fears caused by lingering supply-side issues,” says the deVere CEO.
Bitcoin is widely regarded as a shield against inflation mainly because of its limited supply, which is not influenced by its price.
“This ‘inflation shield’ will continue to bring to the crypto market growing investment from major institutional investors, bringing with them capital, expertise and reputational pull – and further driving up prices.”
Echoing similar sentiments, Martha Reyes, head of research at digital asset prime brokerage and exchange BEQUANT, said: “The news of a new coronavirus variant coming out of South Africa led to a broad-based sell-off across asset classes.
“If lockdowns do ensue, which is not our base case scenario, that will lead to further helicopter money, which ultimately benefits digital assets.”
Ruud Feltkamp’s view supports the opinions of both experts. The CEO of cloud-based automated crypto trading bot Cryptohopper said: “Inflation is skyrocketing, and people are searching for more alternatives for their money on the bank. I don't think it'll take long until investors see this as a ‘cheap’ buying moment. We are still in the midst of the bull cycle, and I think rising inflation will lead to more money being allocated to stocks and crypto.”