The apparent market downfall of China's nightmare Evergrande could cause bitcoin price fall,
and the crypto must brace for the impact.
On 21 September, the price of bitcoin (BTC) dropped by as much as 11%, kicking out the
week on a negative note.
On Wednesday, bitcoin was trading at US$42,137.60 at 1:10 PM AEST . The price of Bitcoin has
fluctuated over the last one month immensely with the highest price being US$ 52,853.76,
while the lowest was US$39,787.61.
Escalating troubles at China Evergrande Group, a beleaguered property giant, has affected
the plunge in the cryptocurrency market considerably.
Bitcoin prices plunged on 20th September as well, while other major cryptocurrencies such
as Ether, Cardano, and Litecoin were still in the red on 21st September.
Bitcoin is the most widely used cryptocurrency on the planet, and it is also one of the leading
cryptocurrency with highest market capitalisation.
The maximum number of coins available is 21 million, the most crucial factor in its high
value.
Why bitcoin declined?
Many people have argued if bitcoin is the best safe-haven asset.
Consumers understand that bitcoin's price typically falls in tandem with the price of
risky assets.
In September 2021, the bitcoin crash occurred merely days after a string of reports demonstrating
the currency's durability.
For instance, El Salvador now possesses the world's third-largest network of cryptocurrency
ATMs, bringing the total number of Central American crypto ATMs to 70%.
However, because it is a decentralised system, it can often be challenging to identify the
specific root of a crypto market crash.
The price swings are thought to be tied to China's real estate sector, notably the Chinese
enterprise Evergrande Group.
With nearly $300 billion in liabilities, Evergrande is the world's most indebted real-estate firm,
and markets throughout the world have plummeted in concern that China may permit Evergrande
to default on its debts.
What impact could Evergrande's issues have on the crypto markets?
• Since the crypto markets never cease trading, financial shock waves are prone to rip through
them rapidly.
Several decentralised trading platforms and global exchanges enabled investors to sell
and purchase cryptos 24/7.
• Cryptocurrencies are frequently held as speculative assets.
On momentum signals, traders are more likely to sell and purchase.
They could then use derivatives to gain exposure, and they could exit immediately if there were
any sniff of danger.
Bottom line
If the wave of contagion sweeps through financial markets,
cryptos could face their most formidable challenge in years.
So far, they've miserably failed.
If Evergrande defaults, it might have a significant influence on China's economy as a whole, as
well as countries around
the world.