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BTC retreats amid risk aversion

Bitcoin slid 2.18% to $47,247 on Sunday, September 19. Trading was rangebound over the weekend, although buyers were doomed to failure due to Friday's dollar rally. Over the past week, the BTCUSDT pair advanced 2.64%.

On Monday, September 20, Bitcoin shed 5.20% to $44,760 (off a low of $44,444), while Ether was hit harder, down 6.17% to $3,122 (off a low of $3,100). The pullback was driven by risk aversion. S&P 500 index futures declined 1% to $4,376. Cryptocurrency is a low-liquidity asset, so any negativity is compounded over a short period of time.

With the opening of a new week, stock exchanges saw a resumption of risk-off sentiment. There are several factors that are weighing on major currencies, commodities and helping the dollar. The greenback has now become more of a defensive asset.

·         Chinese real estate giant Evergrande looks set to default on bonds with debts in excess of $300 mln. In Hong Kong, the company’s shares plunged by up to 17% in morning trading. The government is in no hurry to intervene.

·         Uncertainty remains over stimulus measures and changes in the US debt ceiling. Treasury secretary Janet Yellen is demanding that Congress raise the debt ceiling yet again. Unless Congress raises the ceiling, a government shutdown will follow.

·         Senator Manchin has postponed a vote on President Joe Biden's social-spending package until 2022.

·         A political crisis in relations has broken out between France and the US. The crisis will affect the definition of NATO's new Strategic Concept.

·         Relations between the United States and China have deteriorated due to a military alliance between Australia, the United Kingdom, and the United States (AUKUS). No progress has been made in trade negotiations.

Too many negative factors have built up against risk assets. The clouds over the cryptocurrency market quickly thickened. The technical picture becomes bearish in the older time frames. For this reason, rebounds in crypto currencies will be bought back sluggishly until risk appetite improves. Bitcoin shows a trend line from the $42,843 low through the $43,900 level. Looking at the weekly TF, the side trend continues there after sliding 19%.

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