Monday, Bloody Monday — Bitcoin Experiences Sharp Drop Amid Macroeconomic Risks | by Sylvain Saurel | Sep, 2021

Sylvain Saurel

The doubt that hits the markets heralds high volatility throughout this week.

Image: Adobe Stock

Although everything points to a phenomenal year-end for Bitcoin, I had announced yesterday in an article that this week was a week of doubt due to various macroeconomic risks. I was looking at a possible return to the $42K-$44K area, and that is something that has happened.

It wasn’t a must of course, but the many questions that remain about Evergrande suggested that the financial markets in Asia were starting to panic.

This is what happened, with the Hong Kong stock market falling by more than 10%, for example.

This fall spread to Bitcoin and the entire cryptocurrency market. Many investors sought to recover liquidity. It was no longer time to think in the medium or long term, but rather to panic.

This resulted in a fall in the price of Bitcoin of around -7%:

Illustration by Sylvain Saurel

Zooming in a bit more on a 1-hour timeframe, you can see that a low has been hit at $42,510:

Illustration by Sylvain Saurel

This last bulwark, the $42K-$44K area, held firm today. However, there is no guarantee that it will last. Macroeconomic risks remain and Evergrande’s situation is far from resolved.

The Chinese government has already told several creditors that Evergrande will not be able to pay its upcoming installments. Its debt is $300 billion!

However, it is hard to imagine that the Chinese government will abandon the Evergrande soldier to make an example of him like Lehman Brothers in 2008 on the American side. Indeed, Evergrande is a real estate heavyweight in China:

Sylvain Saurel Tweet

In addition to this risk from China, which could ultimately lead to a global financial crisis, all financial market observers in the US are waiting to see what the Fed will decide on Wednesday 22 September 2021. It is indeed on this day that Jerome Powell is expected to say whether the Fed will slow down the asset purchases that the US central bank has been making on the markets since April 2020.

To taper or not to taper, that is the question.

As a reminder, the Fed has been buying up $120 billion of assets on the financial markets since April 2020, which has caused its balance sheet to swell parabolically. It now exceeds 8,448 billion dollars.

While the level of inflation is still extremely high in the US, which should push the Fed to adjust its ultra-accommodative monetary policy, the new wave of COVID-19 that is emerging in America leaves some doubts about the decision the Fed will take.

The economic recovery is slowing, so the Fed faces a difficult decision.

When there is doubt, you know what that means for Bitcoin and the markets in general: more volatility will set in. So you can expect the Bitcoin price to continue to be volatile in the days ahead. As I said at the very beginning of September, this month is usually red for Bitcoin, and we should not escape the rule again this year.

The big question remains how low the Bitcoin price can go. As long as the $42K-$44K area holds, all is well. If the $42K were to break, then we would probably see below $40K with big support at $38K.

Either way, I am still extremely bullish for the end of the year ahead. Once this September is over in about 10 days, all the on-chain data that confirms a massive accumulation of BTC will come to fruition with a significant increase in the price of Bitcoin to be expected.

This is my feeling, and that is why I continue to take every opportunity to accumulate more BTC. Everyone who fundamentally believes in Bitcoin is doing this. El Salvador’s President Nayib Bukele has just shown that he is one of those who have enormous confidence in the future of Bitcoin by announcing that his country has bought the dip today.

El Salvador is now in control of 700 BTC and will take every opportunity the market gives it. You would be wise to do the same to take full advantage of the Bitcoin revolution in the future.

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