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In December, cryptocurrency prices dropped, and investors blamed omicron and climate change.

• Due to the emergence of the Covid omicron variant, investors have switched away from riskier investments such as cryptocurrencies.
• ESG investors are also concerned about the consumption of energy in bitcoin mining, according to Lou Kerner, partner at Blockchain Coinvestors.
• Cryptocurrencies linked to the metaverse, gaming, and decentralised finance are also luring investors interest and dollars away from bitcoin, ethereum, and ripple, according to Brian Kelly of BKCM.

The rising number of cases of the Covid omicron variant in the United States is a primary cause for the decline in cryptocurrency prices in December, according to investors and analysts.

After the release of the omicron variant, Ethereum is up more than 400 percent in 2021, but it is on track to have its worst month since March 2020, as investors reevaluate their exposure to risky assets.

Bitcoin is on track to double the S&P 500 this year, while ripple is risen more than 200 percent, but both are down double digits this month.

"A lot of macro funds who utilise bitcoin as this pro-cyclical inflation hedge have decided to take profits during December," Brian Kelly, CEO and creator of digital currency investing firm BKCM, told.

ESG — or environmental, social, and governance — investing and concerns about energy use have also been a factor in recent crypto falls, according to Lou Kerner, partner at Blockchain Coinvestors.

"Today, a lot of the financial world looks at 'proof of work' from [cryptocurrency] mining machines unfavourably because of the energy it uses," Kerner told CNBC. "However, if you dig deep enough, you'll find that much of the energy is energy that can't be used for anything else." In light of the enormous value we're getting from it, I believe energy will become much less of a problem next year."

In December, stocks that hold or mine cryptocurrencies fell farther than the assets themselves. MicroStrategy has dropped 21% this month, while Riot Blockchain has dropped 38%. Marathon Digital's stock has dropped by 31%. In the views of investors, coins and equities are strongly linked, something Kerner believes is changing.

"We are on the verge of institutional investors gaining a comprehensive grasp of the various companies and what they truly do, as well as the economics of the businesses," Kerner added. "Most investors still have a hard time grasping the concept of mining. Because it's a minor segment of the market, there aren't many institutional investors who devote a lot of time to it. It's simpler for them to think of it as a basket."

Kelly is bullish on bitcoin and believes it will reach $100,000 by the end of 2022, but that the emergence of the metaverse is pulling investor interest.

"You'll see a lot of different coins do incredibly well," Kelly said, whether they're in the metaverse, gaming, or decentralised finance. "Those early growth prospects are what venture capitalists, new money, and funds like mine are focusing on."