The financial market sentiment flipped back to risk-off on Tuesday after drugmaker Moderna’s CEO warned of a material drop in vaccine effectiveness against the new found COVID variant Omicron.

Bitcoin slipped 2.5%, hitting lows of under $56,000, while the futures tied to the S&P 500 declined by 1.2%. The Aussie dollar-U.S. dollar (AUD/USD) exchange rate fell to a 12-month low of 0.7092, and the yield on the U.S. 10-year Treasury note penetrated Friday’s low of 1.47% as government bonds drew safe-haven demand.

Stéphane Bancel, the CEO of Moderna, told Financial Times that current vaccines will likely be much less effective against the new variant. Bancel added that pharmaceutical companies could take months to produce vaccines at scale to counter Omicron.

Bancel’s comments renewed concerns regarding the pandemic’s trajectory, torpedoing recovery in risk assets. Buoyant mood returned to crypto and equity markets on Monday after reports stated that Omicron patients in South Africa had extremely mild symptoms. Furthermore, U.S. President Joe Biden said the new variant is a ‘cause for concern’ and ‘not a cause for panic’, ruling out economically painful lockdown restrictions. Bitcoin crashed nearly 9% to $53,600 on Friday after the World Health Organization (WHO) deemed Omicorn a variant of concern.

There is consensus in the market that policymakers would provide unlimited support to asset prices if the situation worsens, leading to lockdowns. However, that would push governments and central banks in a tough spot. With inflation already running hotter than expected globally, lockdowns and more stimulus could lead to stagflation, a period characterized by low growth and elevated price pressures. While bitcoin is widely perceived as a store of value asset, it remains vulnerable to weakness in growth-sensitive assets like stocks.

Some crypto investors seem worried about prospects of an extended price drop and appear to be transferring coins to exchanges. Data tracked by Glassnode shows centralized exchanges have received more than 24,950 BTC in the past four days, as evident from the pick-up in the number of coins held in exchange addresses. Investors typically move coins to exchanges when intending to liquidate their holdings.


While the latest uptick in the exchange balances is hardly substantial, a continued rise might signal a deeper drawdown. Bitcoin fell sharply in May after the number of exchange balances violated the year-long downtrend.

All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by CoinDesk constitutes an investment recommendation, nor should any data or Content published by CoinDesk be relied upon for any investment activities. CoinDesk strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions.

Cryptos feed

Latest Crypto News

Latest Crypto News & Analysis

Editors’ Picks

Largest DeFi exploit of 2022 wipes out $80 million from Qubit's Ethereum-BSC bridge

Ethereum-BSC bridge of Qubit Finance suffered a hack to the tune of $80 million in the largest DeFi exploit of 2022. Hackers exploited the "deposit" function to steal cryptocurrencies from Qubit Finance. 

More Ethereum News

Decentraland bulls go against the bearish trend, targeting $2.60

Decentraland (MANA) price has been on the front foot in a challenging market environment. MANA bulls look ready to eke out  28% of gains for this week after the price lifted from the 200-day Simple Moving Average (SMA) and is now set to pop and stay above the monthly S1 support level.

More Decentraland News

Charles Hoskinson awaits launch of Vaccuumlabs DEX on the Cardano network

Cardano network activity hit a peak with a spike in transactions on the network. Charles Hoskinson, the CEO of IOHK, is awaiting the launch of Vaccuumlab's DEX on the Cardano network. 

More Cardano News

Why Bitcoin has entered a new bear market

Bitcoin price has tumbled to a multi-month low below $33,000, as the leading cryptocurrency loses 50% of its value from its all-time high in November 2021. This marks the second-worst sell-off since the bear market that spanned from 2018 to 2020. 

More Bitcoin News

Bitcoin: Federal Reserve cannot tame BTC’s uptrend

Bitcoin experienced some significant losses over the past few weeks, with a more dramatic drop occurring this week after the Fed’s decision was announced. As losses have extended and Bitcoin has entered into the $30,000 zone, concerns regarding BTC being in a bear market have increased.

Read full analysis