Conflicting news about whether Chinese property giant Evergrande had defaulted on its overdue loan payments emerged just before Bitcoin’s (BTC) recent price crash.
Evergrande Group is China’s second-largest property developer and is in debt for roughly $300 billion. There are fears that its collapse could spark a wider financial crisis.
Two minutes after Evergrande’s payment was due, the Deutsche Markt Screening Agentur issued an announcement on Wednesday at 4 pm UTC, stating that it was preparing bankruptcy proceedings against Evergrande.
Two hours later, at about 6 pm UTC, Bitcoin began it’s hours-long pullback to $62,800.
Media outlet Morning Brew reported about 45 minutes later that Evergrande had missed a payment on its outstanding debt, which was due on Wednesday at 4 pm UTC, and defaulted. Another 45 minutes passed before Bloomberg issued a story saying that it hadn’t.
Prices stabilized around $64,500 several hours after the initial drop. This was around the same time Bloomberg reporter Allison McNeely tweeted, “Contrary to what you may have heard ~on the internet~ Evergrande did not default today.”
William Fong, senior trader at Australian crypto-asset investment platform Zerocap, told Cointelegraph:
“Evergrande has not officially defaulted on any of its offshore debt obligations in the international USD bond market.”
“Bottom-line, $148 million is nothing compared to the $300-billion outstanding debt of Evergrande, but it does create a concern for the $100-billion outstanding ‘keep-well’ structured offshore bonds by Chinese SoEs [state-owned enterprises] and corporates,” he stated.
Fong believes that a bailout for Evergrande will not come any time soon because “Chinese regulators were the initiators of a cap aimed at over-expansion in developer’s leverage,” adding:
“This has created potential contagion risk across the entire property developer space and has expanded towards financial institutions and industries dependent on the sector as well.”
Some believe Bitcoin’s price could also be at risk from a stock market meltdown and due to fears that nearly half of Tether’s reserves are made up of commercial paper, amounting to nearly $30 billion. This is enough for the Financial Times to place Tether among “global giants” in that category.
However, Tether has denied that it holds any commercial paper from Evergrande, though it may be exposed to Chinese companies. Commercial paper is a corporate debt note with a short expiration date of usually under a year.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
Recommended Content
Editors’ Picks
Is Altcoin Season here as Bitcoin reaches a new all-time high?
Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.
Shanghai court confirms legal recognition of crypto ownership
A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.
BTC hits an all-time high above $97,850, inches away from the $100K mark
Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: New high of $100K or correction to $78K?
Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.