- Investors and traders are looking for more liquidity, while miners have been ranking up their reserves, and now Bitcoin is getting more challenging to mine.
- Experts predicted that cryptocurrencies like Bitcoin are not at risk, but other stablecoins are at severe risk.
We all know that the financial system is facing one of the worst crises in the world. Then we heard about Evergrande’s collapse news, and now the main question is how it would impact the economy.
It is surprising to hear Evergrande news about Crypto, which might have a massive impact on the financial market. Evergrande, one of China’s largest companies, has been staving off for the past few months.
However, after being unable to repay bondholders, it officially announced that Evergande was a defaulter.
It was one of the biggest debt faultings in the world, and there will be massive ramifications around the global market. The Beijing government also allowed the banks to lower bank reserves so that more cash could be brought into the economy.
The Crypto market is highly dependent on macro needs and their news. That’s why Crypto has been primarily affected by this act.
How will Evergrande’s collapse news affect Cryptocurrencies?
For a long time, we have recognized that the crypto market is correlated to the stock market. But later in 2020, Bitcoin started to decline to around $4000.
After some time, the crypto market has taken a bullish run for almost a year, and Bitcoin reached $65,000 by July 2021.
When there was a bull run, investors started showing interest in it. As a result, Bitcoin and Ethereum are the most traded cryptocurrencies in the market.
Institutions have also started showing interest, which is the main reason for mainstream adoption and crypto regulations.
However, after the fall of Evergrande, institutions suffered a lot, and other investors also started withdrawing their amounts. The bank also limits the loans because of the credit crunch.
Crypto is a decentralized market, highly dependent on the demand and supply of tokens.
If someone withdraws their amount, the coin starts losing value. That’s why the price of Bitcoin is meager compared to the year 2021.
Some reports stated that Evergrande had taken crypto loans in the form of Tether. It is a rumor or reality; we will get confirmation soon. However, the company has confirmed that they have no relations with Evergrande. With the lack of transparency, anything is possible in this volatile market.
Economists believe that Crypto is the future of our economy, but a small change is always a big concern. The Evergrande’s collapse news crypto hits the market hard, with altcoins down by 30% -50% and Ethereum going down by 20%.
Many experts still expect recovery, but the market is unpredictable, and anything is possible.
Can we call Bitcoin’ Digital Gold”?
Bitcoin has been compared to gold in numerous ways. Both are scarce, valuable, and have a finite supply. However, Bitcoin is different from gold in many ways. For example, it is digital, borderless, and can instantly be sent anywhere in the world. So, there is a massive difference between these things.
The idea of Bitcoin as digital gold has been gaining much traction over the past few years. This is because it offers many of the same benefits investors find in gold as an asset class – scarcity, value, portability, and security. Moreover, Bitcoin offers some advantages that gold does not have, such as faster and cheaper transactions.
Therefore, Bitcoin can be called digital gold due to its similarities with traditional precious metals and unique features, making it a more attractive and productive investment option for many worldwide.
Furthermore, differences in how they are mined and stored make them quite distinct from one another. Despite this, many believe that Bitcoin will eventually become an accepted digital money, just like gold has for centuries.
Conclusion
The Evergrande’s collapse shocked the crypto markets, but there is little solid evidence that it harmed the needs. Crypto markets are known for their volatility, and a single event has little effect on the market’s overall trajectory.
One thing is for sure; the market will be watching closely to see how things play out. We’re keeping our eyes on the situation and will update this story if/when more information becomes available.
FAQs
Q. Will a financial crisis affect Crypto?
Ans. Cryptocurrency is a digital asset not tied to any government or central bank. This means it is not affected by traditional economic forces like inflation or interest rates.
However, this does not mean it is entirely immune to external influences. For example, the current financial crisis has caused an increase in volatility in the cryptocurrency market, and investors are concerned about how this will play out shortly.
Q. Will the China ban affect cryptocurrency?
Ans. China has had cryptocurrencies in different phases. At first, they prohibited all financial institutions from engaging with cryptocurrencies. Then they banned domestic crypto mining and then outlawed all cryptocurrencies.
Q. What will happen if Evergrande collapses?
Ans. The collapse of Evergrande will have a significant impact on various industries. He is associated with real estate, and the effect will not be only on properties but in some other sectors also. Consumer electronics, furniture, building materials, electric cars, and many more will be affected.
Q. Why does China fear cryptocurrency?
Ans. China has been one of the countries that have taken a stance against its use. This is mainly because of the potential for cryptocurrency to be used for money laundering, tax evasion, and other illegal activities.
The Chinese government is also worried about the lack of regulation surrounding cryptocurrency and its potential to destabilize the country’s economy. They are concerned that it could increase capital outflows and threaten their financial system.
