Evergrande Pulls Down Stocks And Crypto While Pro Traders Buy The Bitcoin Dip

0

Last Updated on 21 September 2021 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
View all posts

Back in the spring of 2007, all signs pointed towards a bubble brewing in the US housing market. Bear Stearns was the first domino to fall, but as another behemoth of US finance was quick to snap it up, no one really gave it a second look and stock markets kept rising. Summer came and all was quiet on the western front as they say.

Advertentie.

Evergrande copies Lehman

September started and the giant bank Lehman Brothers stopped operating as well. Panic set in and depression soon took over. Many people in the US were forced out of houses they couldn’t afford.

Over to 2021 and a Chinese property developer called Evergrande seems to be in a similar set of trouble. It has failed to pay back some $300 billion in debt, mostly in Chinese housing on many of the newly built apartment blocks. Furthermore, looks like investors have been paying for apartments in cities like Shanghai and Hong Kong that were apparently never built or will never be finished. Spain had a similar story in the 2007-2010 period.

European banks, seeing the carnage on global stock markets on Monday, wrote notes to clients explaining the possible fallout from the Chinese company’s troubles.

Phoenix Kalen, head of emerging-market strategy in London, said:

The repercussions from Evergrande’s prospective collapse will likely contribute to China’s ongoing economic deceleration, which in turn anchors global growth and inflation, and casts a pall over commodity prices

By the end of the day, European and US stocks were dragged down by the fallout from China. As the Asian continent mostly celebrated the so-called Moon Festival, many await Wednesday when markets in Shanghai reopen to see the real damage.

Brian Quartarolo, portfolio manager at Pilgrim Partners Asia explained that it might all be an overreaction, stating:

The price action across several asset classes in Asia today is horrendous due to rising fears over Evergrande and a few other issues, but it could be an overreaction due to all of the market closures.

Crypto dragged down as well

The crypto markets followed stock markets down as investors tried to get out of risky assets as soon as they could and major cryptocurrencies were dragged down. By Tuesday morning, Bitcoin is trading at $42k.

Pankaj Balani, CEO of crypto platform Delta Exchange said:

Investors look to be taking risk off the table on fears that a crisis at China Evergrande Group may become a systemic problem to global markets. Markets will also be looking at the Fed commentary later this week to make sure that there are no changes in liquidity from the central bank.

Luckily there are promising signs for the crypto market as well, as Cointelegraph seems convinced that pro traders are looking at Bitcoin and are buying the dip. Let’s see how this one plays out.