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Bitcoin pares about 50% of losses incurred due to risk aversion

Bitcoin fell by 0.71% to $60,852 against the dollar on Sunday, October 24, and by 1.10% over the past week. The weekly candle range was 11.18%. Sellers pushed the price action down to $60,852 at the end of the week.

Bitcoin saw sharp selling on November 21 and 22. Both cases coincided with a dollar rally amid risk aversion. On these days, investors in all markets shifted on the back of risk aversion to defensive assets amid fears of a potential contagion from the China Evergrande debt crisis. On October 23, the grace period expired for the cash-strapped developer to make bond coupon payment, sending jitters across all markets. The dollar drew additional support from a rise in the 10-year UST yield.

On Friday, the dollar moved higher after a speech from Federal Chair Powell, who pushed gold prices down $31 to $1,782/oz. Powell reaffirmed the Fed's plans to taper asset purchases. The market has priced in a $15 bln QE cut.

Evergrande paid interest on its dollar bonds at the very last moment, averting default. The dollar opened lower on Monday as the developer announced plans to prioritize the rollout of its EV business and resumed work on 10 projects.

Bitcoin has retraced to $62,981 alongside other risk assets. Ether recovered to $4,177. During the uptrend, heavy selling was seen at $62,110 and $62,860 (futures data). Buyers easily cleared $61,700, so now the road to $64,100 is open.

Evergrande's next grace period expires on October 29. So, market participants will need to face another round of worries as that date approaches. Bitcoin will most likely also react with a decline if investors start buying into the dollar.


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