While there was a lull in the US stock and bond market due to the Labor Day holiday, the cryptocurrency market noted a sharp decline. In particular, BTC and other digital assets came under pressure on Monday, writes Barron’s.

If last Friday Bitcoin managed to rise above the $20,300 mark, then on Monday it collapsed again to $19,700.

Bitcoin is trading below the key $20,000 level, meaning it has moved out of the $20,000 to $25,000 range that it has been in for most of the summer after breaking off the $30,000 level.

As Craig Erlam, an analyst at brokerage Oanda, noted, BTC is still showing resilience around $20,000, but this is being tested as the market is once again swept by a wave of risk aversion. A significant break at this point could be devastating as the next key level lower for Bitcoin will be the June lows around $17,500.

And Naeem Aslam, an analyst at the broker AveTrade, notes 2 factors that, in general, do not contribute to the rally of cryptocurrencies in the short term.

“BTC’s daily range has narrowed a lot, indicating that a massive capitulation is coming, which could happen any day.”

BTC has been able to avoid the sell-off that has hit the stock market in recent weeks. Cryptocurrencies should theoretically trade as non-equity correlated assets, but it has already been proven to be associated with fluctuations in other risk-sensitive assets, especially stocks.

The second factor is the ongoing decline in the foreign exchange market, where most of the major currencies lost sharply to the USD index, which measures the dollar against a basket of 6 peer currencies: it rose by 14% this year and another 0.2% on Monday .

And although the bulls are holding on to their positions very well, not allowing bitcoin to fall, if there is a capitulation before the fall, then the next step will not be near the level of $18,000 or $15,000, but much lower, around $12,000.