You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.
After concerns about the impact from the coronavirus omicron variant prompted steep valuation pullbacks for most cryptocurrencies on Black Friday, investors seemed to have digested the risk.
Investor appetite for risk is vacillating as we move toward the end of the year.
The quick recovery posted by many cryptocurrencies after last week’s big Black Friday sell-off is on the verge of being short-lived.
While supply chain issues may not have an obvious connection to cryptocurrency pricing movements outside of the availability of graphics cards and other mining-related hardware, concerns about the omicron variant may be having a less direct impact on cryptocurrency valuations.
China has effectively banned cryptocurrency transactions and mining, India has recently put forward legislation that could ban all private cryptocurrencies, and the recently signed U.S.
While the recent pricing moves are substantial in absolute terms, the pricing swings also look fairly normal when viewed in historical context.
Despite recent sell-offs, Bitcoin’s, Ethereum’s, and Solana’s tokens have posted stellar gains in 2021.
Even with recent pullbacks for Bitcoin’s, Ethereum’s, and Solana’s cryptocurrency prices, it seems clear that the overall crypto market is still in a bullish phase.
It’s possible that the current bull market in crypto still has plenty of legs, but investors should also weigh the risk that the crypto space will face more bearish pressures in the near future.