Did conflicting reports on Evergrande’s default cause Bitcoin to fail?

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Conflicting news about whether Chinese real estate giant Evergrande had defaulted on its delinquent loan payments emerged just before Bitcoin’s recent price crash.

Evergrande Group is China’s second-largest real estate developer and has approximately $ 300 billion in debt. There are fears that its collapse could trigger a broader financial crisis.

Two minutes after Evergrande’s payment was due, the Deutsche Markt Screening Agentur (DMSA) issued an announcement on November 10 at 4 p.m. UTC indicating that it was preparing bankruptcy proceedings against Evergrande.

Two hours later, around 6 p.m. UTC, Bitcoin began its multi-hour withdrawal at $ 62,800.

Morning Brew news outlet reported about 45 minutes later that Evergrande had missed a payment on its unpaid debt that was due at 4 p.m. UTC on Wednesday and had defaulted. Another 45 minutes passed before Bloomberg published an article saying it was not.

Prices stabilized around $ 64,500 several hours after the initial decline. This was around the same time that Bloomberg reporter Allison McNeely tweeted “contrary to what you may have heard ~ on the internet ~ Evergrande hasn’t failed today.”

William Fong, senior trader at Australian crypto-asset investment platform Zerocap, told Cointelegraph:

“Evergrande has not officially defaulted on any of its offshore debt obligations in the international USD bond market.”

“In the end, $ 148 million is nothing compared to Evergrande’s $ 300 billion in outstanding debt, but it creates concern for the $ 100 billion in structured offshore bonds ‘keep well’ by state-owned enterprises and Chinese enterprises, ”he said.

Fong believes that an Evergrande bailout will not come anytime soon as “Chinese regulators initiated a cap aimed at over-extending developer leverage,” adding:

“This created a potential contagion risk throughout the real estate developer space and also spread to financial institutions and industries dependent on the sector.”

Some believe the price of Bitcoin could also be threatened by a stock market meltdown and fears that nearly half of Tether’s reserves are commercial paper, amounting to nearly $ 30 billion. This is enough for the Financial Times to place Tether among the “global giants” in this category.

Related: Record Inflation Makes Investors Take a Closer Look at Bitcoin

However, Tether has denied having any commercial paper from Evergrande, although it may be exposed to Chinese companies. Commercial paper is a corporate debt instrument with a short expiration date, typically less than one year.

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