New COVID Variant Pushes Cryptocurrencies Lower Post-Thanksgiving

The global cryptocurrencies market pushed lower following news of a new COVID-19 strain reported in South Africa after Thanksgiving eve.

The stock market index didn’t fare much better with Dow Jones Industrial Average futures falling as much as 700 points before a shortened trading session. COVID cases were already ticking higher, but this new strain quickly re-instilled fear in the capital markets, which spilled over into cryptocurrencies.

It appears that the pandemic continues to be a wild card despite the move towards global vaccination. This new strain certainly brings another dark cloud of uncertainty that is sure to add a heavy dose of volatility in the days ahead.

“There’s a lot we don’t understand about this variant,” said Richard Lessells, an infectious disease physician at the University of KwaZulu-Natal in Durban, South Africa. “The mutation profile gives us concern, but now we need to do the work to understand the significance of this variant and what it means for the response to the pandemic.”

Dollar Cost Averaging the Dip

Leading cryptocurrency bitcoin fell as much as 20% from the all-time high it reached during the month of October. While cryptocurrencies typically march to the beat of their own drum, it was clear that macroeconomic factors that affect traditional markets were also affecting digital currencies.

On the bright side, this feeds well into a dollar cost averaging methodology. This involves buying the dips in prices when an asset falls in order to lower the average price purchased by an investor.

“Bitcoin is a savings technology and a store of value when you save consistently,” a CoinDesk article notes. “As advisors, we advocate that clients automate savings all the time when planning for goals and retirement. Now you’re using a better method to help them save. You don’t need to turn off all the savings they are doing in other assets.”

“An option here, for example, is to carve off a portion for bitcoin and allow the adoption rate of bitcoin, which is rivaling that of the internet in 1997, and network effects of better money work in your client’s favor,” the article adds. “Thinking about volatility? Dollar-cost averaging reduces that impact.”

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