Bitcoin and Ethereum Down 7%... Cryptocurrency Plummets Amid China Evergrande Bankruptcy Crisis

China's Largest Real Estate Firm Evergrande Faces Bankruptcy Threat, Shocking Cryptocurrency Market
Experts: "Evergrande Group Crisis Spreads... Immediate Sale of Cryptocurrencies Advised"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] The shockwaves from China’s largest real estate developer Evergrande Group are sweeping through the cryptocurrency market. As Evergrande Group’s bankruptcy crisis intensifies, major cryptocurrencies such as Bitcoin and Ethereum have plunged by about 7%.

According to CoinDesk on the 21st, as of 11 a.m. Korea time, Bitcoin is trading at $42,859, down 7% compared to 24 hours earlier. At 9:30 a.m., it briefly hit $40,000, marking a 12% drop at one point.

Ethereum is trading at $3,025, down 6.3%, and Dogecoin is down 5.8% at 21.1 cents.

Previously, Bitcoin had risen to $48,700 on the 19th and maintained the $47,000 range, but over the past 24 hours, it has deepened its decline by about 7%.

This cryptocurrency price drop comes amid spreading rumors of Evergrande Group’s bankruptcy in China.

If Evergrande Group, China’s largest real estate company, actually goes bankrupt, the resulting investor losses could snowball, inevitably impacting global capital markets negatively, analysts say.

Rick Rieder, Chief Investment Officer (CIO) of BlackRock, the world’s largest asset management firm, warned, “The Evergrande Group crisis will bring increased volatility to financial markets.”

Jimmy Chang, CIO of Rockefeller Global Family Office, predicted, “Because China’s economy is so large, if the Evergrande Group-triggered economic crisis materializes, it will affect the global economy as well.”

[Image source=Reuters Yonhap News]

Indeed, global stock markets showed signs of shaking from the Evergrande Group shock on the same day.

On the 20th (local time), the Nasdaq index, which is tech-stock heavy, closed at 14,713.90, down 2.19% (330.06 points) from the previous trading day.

This marks the largest drop in four months since May.

Hong Kong’s Hang Seng Index plunged 3.3%, and the European Euro Stoxx 50 index fell 2.11%.

Famous U.S. investment advisor Jim Cramer said on CNBC that the Evergrande Group crisis would cause weakness in the cryptocurrency market and emphasized, “Investors who have already made profits should sell immediately.”

He added, “Cryptocurrencies have the potential to become mainstream, but for now, the Evergrande Group crisis is spreading, making losses for cryptocurrency investors inevitable.”

Additionally, concerns have arisen that Tether, a major stablecoin issuer that minimizes price volatility by pegging to fiat currency, may hold Evergrande Group bonds. If Evergrande goes bankrupt, Tether could also be exposed to Evergrande-related risks.

Since many purchase cryptocurrencies like Bitcoin and Ethereum using Tether, there is an interpretation that a Tether-originated crisis could spread across the entire cryptocurrency market.

Cramer said, “If Tether crashes, the entire cryptocurrency market will crash. I strongly recommend that investors holding any form of cryptocurrency sell now.”