Evergrande’s Crisis and its Impact on Crypto Markets
China Evergrande Group is on the verge of default, and experts are weighing in on how the group’s bankruptcy could impact the crypto markets. The group’s financial problems coincided with a downturn across the crypto and stock markets, leaving many analysts divided on whether traders should be buying or looking to take profits in preparation of further bearish momentum.
One of the most famous cryptocurrencies also declined. The price of Bitcoin fell around 13% since the downturn started on September 18. During the same period of time, the S&P 500 dropped 1.7%, and the Hang Seng index fell 2.8%.
Some people are asserting that China Evergrande’s default could represent another Lehman Brothers moment. In 2008, the major investment bank’s declaration of bankruptcy on $600 billion worth of debt triggered the global financial crisis.
At the Greenwich Economic Forum, Bridgewater Associates co-chairman and co-ICO Ray Dalio expressed his opinion about Evergrande’s problems. Dalio downplayed the importance of an Evergrande default and suggested that the debt “is manageable”. He thinks that the group’s debt won’t cause structural damage, as the country’s government may restructure the group. Another option is to reach an agreement with China Evergrande Group.
Ming Tan who works at the credit rating agency Standard & Poor also expressed his opinion. The agency’s director predicts the Chinese state will intervene to restructure Evergrande.
The country’s one of the biggest property developers has obligations of more than $300 billion to creditors and other businesses. The situation is quite complicated. For example, an interest payment deadline on its offshore bonds looms on Thursday.
Crypto markets and risk factors
Unsurprisingly, not everyone is so optimistic. Marty Bent is quite concerned regarding Evergrande’s situation. A podcaster, as well as co-founder of Great American Mining, suggested that Evergrande is going under and it is dragging other real estate developers with it. Marty Bent stated that the world is witnessing another “Lehman moment”.
He is not sure that the country’s government will save China Evergrande Group. The Communist Party of China stated that they don’t plan to support the real estate developers who are currently plummeting toward bankruptcy. Marty Bent also noted that he is unsure how the fallout from Evergrande will impact Bitcoin. Still, he plans to keep Bitcoin as a hedge against the fiat-backed global financial system.
Currently, it is hard to determine the impact of the ongoing crisis on the crypto markets. So, it makes sense not to make radical decisions.
Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. If you are interested in following the latest news on the topic, please follow Finance Brokerage on Google News.