The bitcoin price is suffering today after the Evergrande Group in China took a hard fall. As the nation’s second largest property developer, the firm has too much debt – more than $310 billion – and is struggling to pay it back. The situation is causing many assets to experience nasty drops, bitcoin being one of them.
Evergrande Is Leading to a Drop in Crypto Prices
At the time of writing, bitcoin has fallen to roughly $44,000 per unit. Over the weekend, the asset was trading for about $47,000. Aside from BTC, Ethereum has also incurred a heavy slump, dropping by nearly ten percent in the past day or two. The currency is trading for just over $3,000, while Dogecoin – hit even harder – has dropped by 11 percent and is trading for around 21 cents.
The problem surrounding Evergrande is that it is currently caught in what’s called a “liquidity squeeze” that could cause the company to file bankruptcy in the coming future. The company is having trouble paying back its bond obligations, which are due at the end of this week. If the company cannot meet its financial obligations soon, Evergrande may be forced to sell off hundreds of commercial properties at serious discounts.
In an interview, cryptocurrency specialist James Edwards commented:
Bitcoin is like a very tightly coiled spring right now, but it’s still unclear whether it will shoot forward or buckle under the pressure. Record amounts of bitcoin have been taken off exchanges, with levels being at their lowest point in the past 12 months. Low liquidity typically leads to choppy price volatility, which can easily swing in either direction… The reduction of bitcoin held on exchanges suggests that there is very little appetite for selling, with the market now focused on the next leg up before another wave of profit taking. Unfortunately, the uncertainty surrounding Evergrande may spill out into cryptocurrency markets, which could see bitcoin retest support at $42,000 in the immediate future.
This is now the second time in the past few months where bitcoin tanks hard thanks to activity that is occurring in China. Not long ago, the currency dropped into the low $30,000 range after the country announced that it was purging itself of all crypto miners as a means of becoming more carbon neutral. The order was issued by Beijing – China’s capital city – and all other regions were required to comply.
China Is Sending BTC Miners Away
A mass exodus occurred that saw hundreds of bitcoin and cryptocurrency miners being forced to leave the nation they called home for so many years. Many found themselves relocating to regions such as Kazakhstan to the north, as well as Texas and Florida in the west.
Winston Ma – the managing director and head of North America at China Investment Corp. – has stated the nation is now looking to create a new bank-issued digital currency known as e-CNY, which is set to be launched following next year’s winter Olympics in Beijing.