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Bitcoin and ether bounced back on Monday, recovering somewhat after Friday's steep sell-off.
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A small decentralized reserve token known as "omicron" surged as focus on the new COVID-19 intensified.
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South Africa detected the "omicron" variant of Covid-19 last week, initially sparking a sell-off in crypto.
Cryptocurrencies staged a sharp recovery on Monday, bouncing back from the steep sell-off late last week, when the "Omicron" variant of COVID-19 emerged, spooking investors and pummelling financial markets. Meanwhile, a mysterious token with the same name as the new variant surged in value.
Bitcoin rose 4.8% in 24 hours to stand at $57,136.17 by 07:52 a.m. ET Monday, having fallen by as much as 8% at one point on Friday, according to CoinGecko. Ether rose 5% in 24 hours to stand at $4,313.26, recovering from Friday's 11% drop.
The Omicron variant was first detected in South Africa last week. Since then, cases have begun to emerge in a number of countries outside the region and a number of governments including the UK and Israel have scrambled to restrict certain travel. News of the variant on Friday hit risk assets including crypto, as investors rushed for the safety of the likes of gold.
News that the Omicron variant was more transmissible sparked concerns last week. The South African doctor who first spotted the new covid variant, told the BBC Sunday patients who had caught it had "extremely mild symptoms" but more time would need to pass until it is clear how the disease will impact vulnerable people.
By Monday, with still little in the way of hard evidence as to how easily transmissible the variant was, investors reassessed the threat omicron may pose to the economy and edged back into cryptocurrencies and stocks.
"Like gold, Bitcoin is being used as a hedge against global uncertainty in the world," Adrian Pollard, Chief Product Officer to HollaEx, a crypto exchange software company, told Insider.
In the meantime, a little-known decentralized reserve currency named omicron surged by almost 70% on the day and by 900% on the week, as trader focus on the new COVID-19 intensified. According to the developers' website, the token is backed by a basket of assets that includes stablecoin USDC and is only listed on SushiSwap.
"Omicron is a clear sign of a bubble, and while it might be a good way to make a quick return, it is not a good buying option for the long term investors," Freddie Evans, Sales Trader at UK based digital asset broker GlobalBlock told insider.