Bitcoin tumbled almost 8% on Friday after the discovery of a new, potentially vaccine-resistant coronavirus variant saw investors dump riskier assets for the perceived safety of bonds, the yen and the dollar.
Bitcoin, the largest digital currency, fell as much as 7.8% to $54,377, its lowest since Oct. 12.
It was on track for its biggest one-day drop since Sept. 20, and has slumped by more than a fifth since hitting a record high of almost $70,000 earlier this month.
Scientists said the variant, detected in South Africa, Botswana and Hong Kong, has an unusual combination of mutations and may be able to evade immune responses or make it more transmissible.
"The spread of (the variant), especially to other countries, could wither investor appetite further," said Yuya Hasegawa at Tokyo-based exchange Bitbank. "BTC’s upside will likely be limited and the market should brace for further loss."
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
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.
Yet it has remained highly volatile, drawing questions over its suitability as a stable store of value.
Smaller coins, which tend to move in tandem with bitcoin, also fell.