Bitcoin Drops As Crypto Gets Stuck In Evergrande Sale

The digital currency has fell 5.7% in the past 24 hours, trading at $42,955 per coin as of 2:43 a.m. ET on Tuesday, according to cryptocurrency tracker Coindesk.

Previously, it even fell by 12%.

Other cryptocurrencies are also tumbling. Ethereum and Dogecoin are each down 4.4% and about respectively 6% in the last 24 hours.

The fall followed a major decline in US equities on Monday, as Wall Street fears turned to China. Investors were worried about the deepening crisis of Evergrande, a massive Chinese real estate conglomerate at risk of default.
It was the worst performance since May for the S&P (SPX) and the Nasdaq (COMP), While the Dow (ACCIDENT) recorded its worst day since July.
Experts have characterized Evergrande’s struggles as a major test for Beijing, with some concerned about whether the company is at risk from China’s Lehman Brothers moment. While other analysts have said it is far from certain that the Evergrande crisis will become an equally devastating event, the crisis has sent shockwaves across the world.
The real estate company, struggling to manage its $300 billion mountain of debt, would pay interest on some of its bank loans on Monday, according to Bloomberg. Evergrande did not respond to a request from CNN Business for comment about those payments.
According to Refinitiv, interest is also due later this week on two of its bonds worth more than $100 million. Evergrande shares fell 5.7% in Hong-Kong on Tuesday, extending Monday’s losses.

Even though the company is mainly serves mainland China, investors around the world are concerned. The sheer amount of money Chinese companies are borrowing has long been considered an imminent threat to market stability. Now investors fear the exposure banks may have to Evergrande and companies like it.

US banks fell on Monday, by Goldman Sach (GS) and JPMorgan (JPM) one of the Dow’s worst performers.

The issue had weighed in Hong Kong markets earlier in the day as Chinese banks, insurers and other real estate companies were criticized.

5 things to know about Evergrande, the Chinese business empire on the brink

Edward Moya, senior market analyst of the Americas at Oanda, said on Monday that bitcoin was no different from other assets.

“The impact of the Evergrande is putting a huge dent in risk appetite, driving everything down,” he wrote in a note to customers.

Moya noted that cryptocurrencies had performed well this year, “despite all the volatility”.

“So it shouldn’t surprise Wall Street that they are the first assets to be sold at the start of the China-driven market sell-off,” he added.

Others have taken the opportunity to double down. Nayib Bukele, the president of El Salvador known for his bullish stance on bitcoin, tweeted Monday that “we just bought the dip”.

The country bought 150 bitcoins and now has 700 coins, he added.

Earlier this month, Bukele announced that El Salvador de the world’s first country to accept the digital currency as legal tender.

–— Anneken Tappe and Laura He contributed to this report.


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