The rising cases of the omicron Covid-19 variant in the U.S. are a major catalyst for the falling prices in December.
The emergence of the Omicron variant has caused investors to rethink their exposure to riskier assets, which is why the month of March has been the worst since March 2020.
The S&P 500 is up more than 200% in the year to date, but both are down this month.
Brian Kelly, CEO and founder of digital currency investment firm BKCM, told CNBC that a lot of macro funds that usebitcoin as a pro-cyclical inflation hedge have decided to take profits throughout December.
Lou Kerner, partner at BlockChain Co-Investors, said that concerns over energy use and ESG investing have been a catalyst in the recent decline of cryptocurrencies.
TheProof of Work mining machines are looked upon negatively by a lot of the investment community because of the energy they consume. If you dig deep, you will find that a lot of the energy is not used for anything else. The energy will become less of a concern next year because of the huge value we are getting from it.
In December, the stocks that hold or mine cryptocurrencies saw deeper declines than the assets themselves. MicroStrategy is down 21% this month, while Riot Blockchain is down 38%. Marathon Digital fell by a third. The coins and stocks are closely related to investors.
We are on the verge of a deep understanding by institutional investors of the different companies and what they actually do and the economics of the businesses. It is hard for investors to wrap their head around mining. It is a small part of the market, so institutional investors don't spend a lot of time there. Kerner said it was easier for them to just look at it as a basket.
Kelly believes that by the end of the century, it will be $100,000 and that the emergence of the metaverse is pulling investor interest.
Kelly said that there will be a lot of other coins if they are in the metaverse, gaming or decentralization finance. New money and funds like mine are focused on those early growth opportunities.
