Any variant of a calamitous pandemic is always bad news. If we maintain a narrow view on just your crypto portfolio though, you could be in for a decent windfall.
Since the Omicron variant came into prominence, markets have been in disarray. Bitcoin shed 8% of its value on the day of variant discovery, mirroring what was happening in traditional markets. That slump was a few points from setting a record for a one-day drop. The U.S stock market also took a strong jab in the face and President Biden was quick to issue travel sanctions from Southern Africa.
The Omicron variant, just like the Delta variant, presents yet another period of uncertainty. It could be much ado about nothing, or yet another series of lockdowns and mandates. One thing is for sure, uncertainty and financial markets don’t share the same bed, much less the same room.
For all we know, we could be getting ready for an even further market slump if the anxiety persists.
In a hilarious bit of irony, a token coincidentally known as Omicron went up 900% when the rest of the market was running for cover.
There are reasons to be upbeat though, if you are a bitcoin investor. Let’s take a brief look at a few reasons why you should bear the current turbulence.
1. A possible overreaction
The serious market slumps witnessed on the day of variant discovery were manifestations of panic among investors. The fear is real and markets are finding it hard to deal with it. The positive is that the World Health Organization has urged people not to panic, though it termed the variant as a virus of concern.
There is no conclusive evidence that this variant is more dangerous than its predecessors. Nothing suggests that this new strain of pestilence can make you sicker, kill you faster and bankrupt you with medical bills. The fear, though understandable, is based on little to no conclusive facts. There are valid points about it being more transmissible, but that should count for little if it doesn’t prove more deadly than previous strains.
Markets adjust to new information quite quickly. If Omicron is not proven to be a far more dangerous strain, you can expect a market bounce that will make all this seem like a distant memory.
2. The inflation shield
When it began to look like the pandemic years were behind us, investors had their eyes fixed on the wreckage. The toxic remnants left by the pandemic that could have adverse effects on the economy. The ‘High Inflation Era’ was solidly documented with facts and figures and it rang on like prophecy.
Benoit Mojon, an economist and director of monetary policy, wrote that he expected inflation numbers to surge in the aftermath of the pandemic. He outlined base effects such as price increases in pandemic-related products, increased energy costs and supply chain disruptions.
The new variant is giving indications that we might not be out of the woods yet in terms of the pandemic. This does not make the reality of inflation disappear, it exacerbates the rhetoric and raises people’s antennas even more.
Bitcoin has not behaved like a storage haven since Omicron became a thing, but a lot of investors will prefer it to the U.S. dollar. Lesser economies are already making the transition and are almost pulling the plug on their fiats.
Ukraine and El Salvador have recently joined this trend and it seems like Nigeria will too. Transfer of huge retail and institutional capital into the crypto market looks inevitable at this point, and you better be smartly positioned when this begins to happen.
3. The bull cycle was fast approaching
Before the Omicron panic set in, we were all bracing for a bull run. The dips we saw in November were actually a good thing for investors. The price of Bitcoin had seen a 20 per cent retracement which set off alarm bells that we were entering into a bull market territory. That is still the case unless the Omicron variant finds a way to depress prices to unprecedented lows. The severity of the disease, considering what we know now, plus a bucket load of optimism, suggest this won’t be the case.
Top analysts were already proclaiming that BTC price’s short-term worst-case scenario had come and gone. Yet, the volatility did not get out of hand. Stock-to-flow model experts PlanB had predicted a $98,000 BTC price by the end of November. That’s how bullish they were before some external fundamentals developed a mind of their own.
At the start of October, PlanB had it that a mind-blowing bull market period still had six months to go,citing that there were few to no obstacles in the way of this projected reality.
It looks like we all have a plan until Omicron punches us in the face!
Staying on a positive track, Omicron will just be a fancier name than the Delta with no chastening effect on markets in the near term. If it plays out that way, then PlanB’s vision of the markets should be your Plan A as you look to invest.
If this article has allayed your fears about going long or at least staying invested, here is where I throw some cold water on you.
As you make moves on your portfolio, it’s important to stress that this virus could end up being a big deal after all. Most countries are doing a spectacular job at cautioning the masses and restricting travel. If Omicron manages to squeeze past borders and spread across many countries, prices could be hurt. You could be tested a while longer than you thought you would. It’s all about how much you can stomach and the level of exposure you can bear.