Have you thought the underlying reason for an immense change makes absolutely no sense? In some cases, the reasons for change are bizarre, and in other cases, it’s downright funny.
Wondering what we are talking about today?
The crypto currency Omicron. Yes, you read it right.No we have not shifted our focus from equities to cryptos. Read further to know what caught our attention about Omicron the crypto.
This digital currency soared over 900% since 29th November after reports surfaced of the newest COVID variant Omicron. What made this crypto trading at $65 (Rs. 4874) on 26th November reach $680 (Rs. 50,996) on 29th November?
You will be shocked to know, news of the COVID variant from South Africa was the reason for this massive surge. No other reason. That’s it!
It is funny how having the same name as a virus helped the unknown crypto trade higher than the well-known Bitcoin on the market.
CoinMarketCap says the currency grew 10x within days after the variant was discovered in South Africa. It traded steadily throughout last week before the fear of another devastating COVID wave started dominating the news.
The Omicron crypto lost half its peak value and traded at $312 (Rs. 23,404) on Thursday, 2nd December 2021 with a fully diluted market cap of $312mn (Rs. 2340cr).
Coincidentally, the World Health Organization (WHO) skipped the two Greek letters Nu and Xi while naming the latest coronavirus variant. WHO felt Nu would sound too much like the English word New, and Xi would stigmatize a region.
What is Omicron currency?
CoinTelegraph describes Omicron as a decentralized reserve currency protocol that runs on the Ethereum layer-two network Arbitrum. Several crypto assets like the USD Coin stablecoin and liquidity provider tokens support Omicron’s native OMIC token. You can trade the coin on the Sushiswap decentralized exchange only. You can also call it the Bond-based yield farming project. For the almighty’s sake, we are not asking you to trade in the coin.
Bloomberg author Mark Gongloff joked, saying, “Do not taunt Omicron the Crypto Thing. It may suddenly accelerate to dangerous speeds.” He asked, how does an illiquid asset trading on an obscure, risky exchange, not even a month old, grow rapidly?
He believed the coin’s growth was not connected to the variant though the derivative effects of the virus on commerce, sentiments, and markets that make the currency a part of the investment universe could have played a role in the sudden price surge.
CoinDesk’s Omkar Godbole remarked that the meteoric rise could perhaps represent peak irrationality. What? Perhaps!
Do a little bit of research and dig around; you will find several such incidents in the stock markets too. A memorable example is how people bought shares of the medical device Signal Advance after Elon Musk tweeted about the Signal App, asking people to use it. The Netflix series inspired Squid coin is another example.
How did this happen?
Did the fast-trading algorithms accidentally buy names similar to their targets? Did some traders hit the wrong key? Whatever the reasons, the coin’s surge is irrational and absurd.
It’s like buying Bounty chocolate because you heard about Bounty. It is a cautionary tale for investors who get excited when a stock or coin surges and starts investing. Don’t let the rapid rise of the Omicron crypto coin fool you. Outperforming popular coins like Bitcoin and Ethereum doesn’t make Omicron a worthwhile investment.
Again, we are not recommending investing in Bitcoin or Ethereum either.
There is little information about the decentralized finance project, with project data not available easily.
When you come across such investments, STOP. THINK. RESEARCH and then INVEST; only if it meets the fundamental standards and has a history of robust returns over the years.