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Bitcoin and Other Risk Assets in Focus as Covid-19 Jitters Return

BTC and risk assets, such as stocks and oil, to endure increased jitters this week as new Covid-19 fears slam financial markets.

SageFX - Nov, 29, 21

*Sage FX would like to state that traders should research extensively before following any information given hereby. Any assumptions made in this article are provided solely for entertainment purposes and not for traders to guide or alter their positions. Please read our Terms & Conditions and Risk Disclosure for more information.

Principal Points

  • This week could see increased jitters as traders try to price in new coronavirus fears
  • Bitcoin and risk assets in focus after Friday’s selloff knocks away billions from the markets

What’s Moving in the Markets?

Bitcoin, stocks, currencies, and other risk assets are likely to be especially volatile this week after Covid jitters returned. On Friday, a new coronavirus variant, called Omicron, slammed financial markets as investors scrambled to find any safety.

The biggest concern among market participants was the possibility that vaccines were not guaranteed to offer protection. On that note, traders sold off risk assets, resulting in the worst day of the year for many financial instruments.

Bitcoin, for example, dropped 8% to reach a six-week low near $53,500. It’s important to highlight that the drop was not that big compared to the usual volatility of the orange coin. Ether, the second biggest coin, dropped about 12% on Friday and slipped under $4,000.

What’s Happening in Stocks?

The biggest panic was found in the equity market in the US and Europe. Stocks on both sides of the Atlantic crumbled under the heavy selling pressure. First, European markets declined more than 3% with the Stoxx Europe 600 down roughly 3.7%. Further, Spain’s IBEX35 dropped 5%, while the CAC40 in Paris tumbled 4.8%.

Stateside, the threat of new lockdowns and economic restrictions pushed the Dow Jones Industrial Average lower by 2.5%. In addition, a sharp drop was seen in the S&P500 which fell 2.2%. The Nasdaq Composite, on the other hand, was more contained in its slide, down around 2.2%.

In more detail, the downward move in the 30-stock Dow Jones turned into the worst day of the year for the benchmark index.

What’s the Big Picture for Traders?

The global rotation away from risk assets, however, could quickly be reversed. While scientists and health experts assess the severity of the Omicron virus, traders prepare to rush back into those discounted stocks and cryptos.

With this in mind, the market this week is likely to be defined by any breakthrough in the research into the virus. Some reports already say that the Omicron Covid strain so far has had relatively mild effects on patients’ health.

“The cases that have occurred so far have all been mild cases, mild-to-moderate cases, and that’s a good sign,” African health experts say.

The Omicron coronavirus variant was first discovered in South Africa on Friday. Since then, it’s been found in a growing number of countries, including the UK, Italy, the Netherlands, Israel and more.

What to Watch in the Markets?

Besides developments over the coronavirus threat, traders and investors will be monitoring several important economic events this week.

Federal Reserve Chairman Jerome Powell will speak to US lawmakers on Monday. He is expected to present more details over the central bank’s plans around tapering and a potential framework for raising interest rates.

Furthermore, the market will be shifting its attention to the non-farm payrolls slated for Friday. The data will reveal how many new jobs were added by US employers in November.

It’s worth noting that after Friday’s covid-fueled drop, traders in every asset class will be looking to buy the dip. To this end, cryptocurrency assets will be especially volatile as they are highly liquid and tend to move aggressively in either direction.

Economic Data Coming Up Today (EST times)

Today’s events include testimony from Fed Chair Powell at 10:00 am and one more at 03:05 pm.


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