LONDON, Nov 29 — Cryptocurrencies survived one of the largest market shocks since the earliest days of the pandemic last week, with El Salvador a notable dip buyer, while investors decided not to share Adidas’ excitement over a foray into the buzzy metaverse.

El Salvador’s plans to build the world’s first "Bitcoin City” and Adidas’s entry were the bright spots for digital assets in a week that saw major cryptocurrencies clobbered by fears over the new coronavirus variant Omicron.

Bitcoin was down 0.5 per cent today and has lost about 17 per cent of its value from a record US$69,000 (RM292,456) over the past 19 days. But rival currency ether and tokens linked to the metaverse and decentralised finance applications have fared better.

Adidas’s move made waves after the German sportswear retailer said it was partnering with Coinbase Global Inc in a tweet, although Adidas shares did not join that celebration.

The company also bought a piece of virtual land called "adiVerse” in the blockchain-based world The Sandbox, with the German company hinting it would build that out to offer virtual reality products, and comes at a time it has warned of a sales hit due to supply chain snags.

"That’s something big because it is also a hint of what’s about to hit the fan in a couple of months in the NFT space: the Adidas sneakers and other branded virtual clothes, shoes and objects,” said Ipek Ozkardeskaya, senior analyst at Swissquote.

The price of SAND, the virtual currency used to buy property and other items, jumped 90 per cent to US$7.18 on the news, according to CoinGecko, receiving a second boost since Facebook rebranded to Meta Platforms Inc late last month.

MANA, the speculative currency used in leading blockchain-based online world Decentraland, surged 36 per cent to US$4.90. Land and other items on Decentraland are sold in the form of non-fungible tokens (NFTs).

Besides the selloff triggered by news of Omicron, last week’s biggest headwind to bitcoin and ether came from an Indian government announcement of a bill that would ban most private cryptocurrency transactions by the country’s estimated 15 million to 20 million crypto investors.

‘Survive winter’

Bitcoin traded around 4,376,477 Indian rupees (RM247,088) on Indian exchange WazirX, a light premium to prices outside the country, reversing from a 15 per cent discount on Tuesday after the announcement.

"If it is a blanket ban, in combination with China, you’re talking two centres of the world’s population that are effectively frozen out of crypto,” said Simon Peters, crypto analyst at eToro.

Elsewhere, El Salvador’s president announced plans to build the world’s first "Bitcoin City,” funded initially by bitcoin bonds. El Salvador adopted bitcoin as legal tender in September.

Average daily trading volumes across all digital asset product types fell by an average of 13 per cent through Oct-end to November 19, while net inflows averaged US$203 million, half that in October, according to data from CryptoCompare.

It showed that while assets under management in bitcoin-related products have fallen 9.5 per cent to US$48.7 billion in the first three weeks of November — the largest month-on-month fall since July — assets in ether products rose 5.4 per cent.

Decentralised finance-related token Solana (SOL) & Litecoin-based products returned 22.0 per cent and 14.9 per cent respectively in the 30 days to November 19, with daily trading volume in the 21Shares Solana ETP nearly tripling to US$6.3 million, CryptoCompare noted.

A patch of virtual real estate in Decentraland sold for a record US$2.4 million worth of cryptocurrency on November 23, the buyer — crypto investor Tokens.com — and Decentraland said.

Meanwhile, the approaching December holiday season could increase volatility, while the US Federal Reserve’s stimulus taper could be bearish for bitcoin, analysts said.

"There should be more agnostics focusing on the fact we are in a bad part of the cycle for crypto here — the corrections could be epic,” said Brent Donnelly, president at market insights firm Spectra Markets.

"Make sure you can survive winter.” — Reuters