The crypto market took a big drop on Monday, going lower than the early September dip. Bitcoin price went down to $40,100 while Ether touched nearly $2,800, and the total cryptocurrency market cap dropped to $1.92 trillion.

As of writing, Bitcoin has made its way back above $43k, Ether $3k, and the total market cap is also back above $2 trillion.

El Salvador bought this dip as tweeted by President Nayib Bukele on Monday, adding the central American country has raised its total holdings to 700 BTC with the latest purchase of 150 BTC.

“They can never beat you if you buy the dips,” said the President.

In the past-24 hours, 210,200 traders have been liquidated for $1.24 billion.

This sell-off has sent the funding rate in Bitcoin perpetual into negative across the board, as much as -0.368% on OKEx. USD or USDT margined contracts on Huobi and Binance are the only ones positive at 0.0077% and 0.01%, respectively.

Bitcoin shorts in the futures markets have actually increased to 1,187 contracts, the largest since early August, according to CFTC data released Friday.

“Some have attributed the sudden dip to the currently ongoing Evergrande situation in China, which has already caused turmoil in traditional markets,” wrote Jonas Luethy, a sales trader at the UK-based digital asset broker GlobalBlock.

7/ Potential selling coming out of Asiahttps://t.co/YSzbKYGr8P

— Delphi Digital (@Delphi_Digital) September 20, 2021

According to Vijay Ayyar, head of Asia Pacific with crypto exchange Luno, the current backdrop of big news events is why Bitcoin and stocks are closely linked. “There’s a bit of uncertainty in the markets with the upcoming Fed taper talks and meetings,” he said.

Bitcoin’s correlation to Nasdaq on a 30-day basis has been consistently positive since February last year. As Bitcoin becomes more mainstream and gets integrated into global financial markets, it may respond more to the changes in the risk appetite driving the global sentiment.

“The global markets continue to dump, crypto is just gonna go along for the ride. If trad markets reclaim what they've lost in the last few days crypto will too,” said trader Don Alt.

As we reported, the crypto market’s dip came in line with the global stock markets. September actually has the worst track record of any month, and history shows the selling tends to pick up in the second half of the month.

The S&P 500 fell 1.7%, recording its worst day since May and the Dow Jones also had its biggest one-day drop of 1.8% since July. The tech-heavy Nasdaq dropped 2.2%.

Meanwhile, bond prices gained as investors sought safety, pushing the 10-year Treasury yield to 1.31%.

In the short-term, Bitcoin is a slave to the S&P.

Extremes in Fear & Greed result in ultra-high correlation.
Today we are in Extreme Fear.

Good news is a number of metrics suggesting S&P is near bottom. pic.twitter.com/D2evJGntg3

— Charles Edwards (@caprioleio) September 20, 2021

Investors across the markets are flocking to the sidelines in September amidst several emerging risks for the market. Investors fear a contagion effect on financial markets from the troubled China real estate though the shockwaves aren’t really expected to go beyond the Chinese market.

Another big thing this week is the Federal Reserve beginning a two-day meeting Tuesday. While investors are worried the central bank will signal its readiness to start reducing its monetary stimulus amidst surging inflation and improving the labor market, the reaction of the stock market ahead of it might drive the officials not to do that.

Thomas Lee, head of research at Fundstrat Global Advisors, called this a “really good buying opportunity.”

Speaking to CNBC, Lee said this steep decline doesn’t necessarily represent a bottom for the market but that this “sort of broad-based selling” is a “time to add incrementally.”

“We're at a moment where everyone's only seeing darkness and downside and usually that when you want to be adding risk.”

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