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BTC hammered by risk aversion

Bitcoin shed 2.35% on Monday, September 27. Price action has been hovering around $42,500 for several days, while major currencies have traded marginally lower against the dollar. The DXY index hit a new high on the back of risk aversion and rising UST yields.

The 2-year US Treasury yield surged to 18-month highs on concerns about an approaching government shutdown, as well as Fed taper expectations. The more bond rates go up, the more expensive debt becomes. Funding for US government operations will last until December 3. Lawmakers need to resolve the debt ceiling issue over the next few days in order to avert a shutdown. Tech shares are experiencing a sell-off on expectations that QE will be wound down.

Support is located at $40,700 on the hourly and 4-hour TFs. Moreover, the lows of $40,675 and $40,750 are close to each other. Sellers plan to loosen stops in order to push the price action below $40k. Looking at downside targets below $40k, you can see a level in the vicinity of $37.5k. Conversely, resistance levels are located at $43,500 and $46k.

Chinese developer Evergrande remains a ticking time bomb for all trading floors. The PBoC has pledged to protect home buyers by pouring more money into the banking system. This is what is preventing a sell-off in Asian, European and US stock markets.

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