Bitcoin, Crypto Fall Along With Actions On Evergrande Overflow Risks In China

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Source: Adobe / Wirestock

As problems with Chinese real estate development giant China Evergrande continue to worsen, investors in everything from stocks to bitcoin (BTC) and the broader crypto market are worried about the spillover effects. potentials that a Chinese “Lehman moment” might have.

As China’s second-largest real estate developer, China Evergrande holds more than $ 300 billion in debt, ranking the company as “the world’s most indebted real estate developer,” according to CNBC.

The company has repeatedly seen its ratings downgraded by international rating agencies and has itself repeatedly warned that it could default on its debt.

And while this may not at first glance be related to bitcoin, some industry insiders are increasingly concerned about the impact such a large Chinese default could have, and perhaps already has, on the markets. cryptocurrencies.

Among those who raised concerns, Alex Mashinsky, founder and CEO of cryptocurrency lending and borrowing company Celsius Network, said a “cascade of defaults in the global financial system” could lead to the bitcoin with it.

“BTC cannot break [USD] 50k might have more to do with China than the FUD regulation, ”added the CEO.

In addition, the issuer of USDT Tether was forced to issue a statement last week stating that the company has never made or now holds any commercial paper or other debt or securities issued by Evergrande.

Meanwhile, as the South China Morning Post reported on Monday, cracks have also started to appear elsewhere in China’s real estate sector. Among the property developers currently under close scrutiny are Guangzhou R&F and Fantasia Holdings, both of which have seen their credit ratings drop to “negative” by rating agencies Fitch and S&P Global Ratings in recent days.

“The worst part is that not only is China Evergrande collapsing, but also other Chinese home builders are drowning in the tsunami caused by this tsunami,” said Zhou Chuanyi, analyst at the credit research firm. Lucror Analytics in Singapore, quoted by the media. .

The problems have so far led to a sharp drop in the stock market on both the Hang Seng Hong Kong exchange, as well as the US stock markets, with Hang Seng trading down 3.3% for the day and the US S&P 500 is expected to open down 0.9%. later today.

Meanwhile, the traditional safe haven gold traded lightly, gaining 0.17% for the day at 09:30 UTC.

In the crypto markets, bitcoin has fallen 6% in the past 24 hours to trade at $ 45,211, after falling more than $ 48,800 on Saturday.

7-day BTC price chart. Source: CoinGecko

“After closing above $ 47,000 on Saturday, BTC broke 50-day moving average yesterday <..>. Some attributed the sudden drop to the current situation of Evergrande in China, which has already caused turmoil in traditional markets. Analysts have suggested that a turbulent week is ahead, with a potential pullback to $ 41,000, although key support remains at $ 44,000, ”said Jonas Luethy, Sales Trader at the asset broker. UK-based digital GlobalBlock, in an emailed comment. .

Likewise, Ethereum’s native ETH token has fallen 7.7% in the past 24 hours to trade at $ 3,172.

ETH 7-day price table. Source: CoinGecko

Despite the sales seen in the crypto markets today, liquidations were still at fairly low levels for both bitcoin and other cryptoassets at the time of publication.

In the past 24 hours, observed volatility in BTC has resulted in the liquidation of $ 303 million, the overwhelming majority of which were long positions that were forcibly closed on Binance, according to data from Bybt.com.

For ETH, the situation was similar, with just over $ 200 million liquidated over the same period.

And while bitcoin – still viewed by many as a ‘risky’ asset – has so far suffered, crypto industry insiders and analysts say the chain’s strong fundamentals are a reason for it. to be optimistic.

As described in Chainalysis’s latest Intel Market report, the on-chain signals suggest that most bitcoin holders remained bullish during the month of September, as coin flows in the exchanges “fell rapidly” in the markets. days after the September 7 sale.

“In fact, whales, on both Bitcoin and Ethereum, appear to be settling for a long period of detention, with most whales that entered in the first quarter of 2021 continuing to hold,” wrote Philip Gradwell, chief economist at Chainalysis.

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Learn more: Why Bitcoin likes a tough environment? To store or not to store value? Three reports weigh on Bitcoin

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