Bitcoin was on its way to log its worst daily performance in two weeks on Monday as a strengthening greenback affected demand for safe-haven assets.
Spot BTC/USD declined by up to 7.40 percent to its intraday low at $10,180 as the US dollar index headed for its best levels since August 12. Meanwhile, US stocks tumbled in a rush of fears about a fresh wave of lockdowns to tackle the coronavirus crisis.
“We do expect the pace of recovery to slow over the next several quarters in most if not all economies as the virus spread faster with the arrival of cold weather in the northern hemisphere, and thanks to a likely halt in US fiscal support until after the election this November.” – analysts at Deutsche Bank SAID.
Bitcoin had soared about 74 percent this year and reached a session high at $12,486 in mid-August amid decreasing bids for the US dollar and massive stimulus aimed at reviving the coronavirus-struck economies. The rally nevertheless slowed down in recent weeks, with a recovering greenback and doubts over more stimulus package deals from the US government.
BTC/USD was trading at $10,400, down 4.76 percent, as of 1645 in London. Other top cryptocurrencies, including Ethereum and XRP, were also trading lower.
The latest plunge in the Bitcoin market also appeared ahead of Jerome Powell’s scheduled hearing before the US lawmakers on Tuesday. The focus of the hearing expects to fall on fiscal support that remains halted in the US Congress over the disagreement about its size between the Democrats and the Republicans.
On Thursday, the US Treasury Secretary Steven Mnuchin will join Mr. Powell before the Senate Banking Committee to discuss coronavirus relief. Depending on the outcome of the hearing, the outlook over fiscal aid would decide whether or not the US dollar would extend its rebound.
That said, an optimistic outlook for the next stimulus package would drive the greenback lower. That expects to raise Bitcoin prices thanks to the cryptocurrency’s inverse correlation with the dollar.
On the other hand, further delays in the aid could accelerate the Bitcoin downtrend.
“This is the part of the game where fear grabs control,” said pseudonymous market analyst Crypto Mikey. “September-November should be viewed as February-April to me. Dollar-cost averaging in equities and waiting for a Bitcoin capitulation wicking event (we haven’t had one) is how I’ll be playing both markets, again.”
Bitcoin Technical Narratives
Konstantin Anissimov, Executive Director at CEX.IO, told BlocDesk via email that the Bitcoin market psychology remains affixed to a missing candle in the Bitcoin Futures charts at CME. He noted that the spot BTC/USD rate could fall further to fill the so-called gap.
“The thought of Bitcoin’s CME gap at $9,600 continues to haunt investors,” said Mr. Anissimov, adding that traders should watch out for $10,600 and $10,000 levels as “failing to hold above them could see BTC drop towards $9,000.”
Scott Melker of the Wolf Den Newsletter, meanwhile, tweeted:
This is the chart I've been sharing in the newsletter.
Short trigger (I didn't take it) was the break of the blue ascending channel.
$10,540 still a key line. Price bounced perfectly from demand on this move down, so far. pic.twitter.com/SlE09QM3rq
— The Wolf Of All Streets (@scottmelker) September 21, 2020
And Yashu Gola (that’s the author of this article) reminded:
Dont expect a Bitcoin crash, homies. There wasnt any stimulus package to save our asses in March 2020.
— Yashu Gola (@bitcoinwallah) September 21, 2020
So far, Bitcoin was retaining its bullish bias by holding key support levels near $10,000 and above.