Bitcoin plunged 6.74% to $46,681 heading into the weekend. Last week’s low was recorded at $45,456 during the US trading session on Friday amid the strengthening of the dollar and a pullback in stock indices.
The dollar rallied on the back of remarks by Federal Reserve Governor Christopher Waller, who said that rates could be raised as early as March, after the decision to halt buying bonds earlier than planned.
Over the weekend, the price recovered to $48,300 and has fallen to $45,852 since the opening of the Asian session on Monday. Risk aversion has prevailed since early this morning. Global markets opened with a pullback in oil and US stock futures. Bitcoin has a positive correlation with the S&P 500 index, so it didn't take long for the BTCUSD pair to head south.
The reason for the flight to defensive assets could be due to rising concerns about the spread of the Omicron variant. On Saturday, London Mayor Sadiq Khan declared a state of emergency in the city due to a spike in the number of cases of Omicron cases. On December 17, Britain recorded an all-time high of daily infections: 92,907. Today the media reported that pandemic containment measures will be tightened in the near future.
The Netherlands has imposed a strict lockdown from December 19 to January 14, 2022 to curb the spread of Omicron. Only shops selling essential goods will remain open. Negativity was exacerbated by the news of the death of a New Zealand man who received the Pfizer vaccine.
Infectious disease expert Anthony Fauci forecast a significant deterioration in the epidemiological situation in the US due to the spread of the Omicron strain.
Investors piled into such defensive assets as US bonds, the dollar, Japanese yen and Swiss franc. The BTCUSD pair continues to trade in the $45,450-51,936 range, with a recent high of $49,056. By the time of writing, price action dropped to $45,929 in line with a narrowing formation.
If the US stock market holds today, the BTСUSD pair could see a recovery. Nothing can be done as the cryptocurrency is going through a difficult time. Buyers need to fend off selling, otherwise the triggering of stops below $45,400 could cause a plunge to $44k. Investors should also note that this is a shortened trading week ahead of Christmas. Trading volumes on global trading floors will gradually drop off and get back to normal no earlier than January 3, 2022.