Bitcoin Bounces Off 6-Week Low, Tracking Recovery in Stocks

“The long-term uptrend still has a hold on bitcoin,” one analyst said.

AccessTimeIconSep 21, 2021 at 9:56 a.m. UTC
Updated May 11, 2023 at 5:28 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Bitcoin continues to take cues from equity markets amid macro uncertainty, seeming to contradict the popular narrative of the cryptocurrency being a safe haven like gold.

The cryptocurrency has bounced to $43,000 from the six-week low of $40,200 reached early today, with futures tied to the S&P 500 signaling a risk reset with a 1% gain. Major European stock indices are also trading higher alongside weakness in the safe-haven U.S. dollar despite lingering concerns about China’s property market and its contagion risk for the global economy.

Fears that cash-strapped Chinese property giant Evergrande would default on its interest payments rocked global markets on Monday, sending bitcoin, the S&P 500 and growth-sensitive risk assets lower. Evergrande Chairman Xu Jiayin sent a letter to 125,000 employees on Monday, saying the company would soon “walk out of the darkness.” The company’s real test lies ahead as $83.5 million interest payment is due on Thursday, and another $47.5 million payment is due on Sept. 29. A default could bring another round of panic selling in risk assets.

Some experts are worried that an impending drawdown in fiscal spending would lead to an economic slowdown in the coming quarters and weigh on risk assets. According to The Wall Street Journal, the U.S. government could run out of cash and hit the debt ceiling between mid-October and mid-November. On Sunday, U.S. Treasury Secretary Janet Yellen renewed a call for raising the debt ceiling, warning that a failure to do so may trigger a historic financial crisis.

However, for now, the market focus seems to have shifted to the two-day Federal Reserve meeting scheduled to begin later today.

According to some observers, the central bank may refrain from announcing the withdrawal of asset purchases or early rate hikes, given the possibility of a messy spillover of China’s property market woes into the global economy.

Bitcoin and risk assets in general will likely pick up a strong bid if the central bank pushes out its tapering plans to 2022. Per Jake Wujastyk, chief market analyst at TrendSpider, $50,000 is the major resistance level to beat for the bulls.

“After a large move up over the summer months, bitcoin has started to trade within a range between $43,000 and $49,000-$50,000,” Wujastyk said in an email. “Until one of these levels breaks up or down, market participants should expect continued range-bound trading between these two support and resistance zones.”

According to Katie Stockton, founder and managing partner at Fairlead Strategies, the path of least resistance remains on the higher side. “The long-term uptrend still has a hold on bitcoin, with our monthly indicators pointing higher, putting short-term volatility into a bullish context,” Stockton said in a weekly research note published late Monday.

“When the pullback matures, we will turn our attention back to the recent peak near $52,900 as a minor hurdle to all-time highs,” Stockton added.

The 200-day moving average at $45,813 may offer resistance ahead of the Sept. 18 high of $48,825.

According to TrendSpider’s Wujastyk, $42,600 is the volume-weighted average price from April highs and represents key support. Sellers failed to establish a foothold under that level during the Asian hours.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.