The crypto market after a slight relief is again falling into the bearish trap. Bitcoin price yet again begins to tank again below $43k.The crypto industry, while in bear run, sees further push-back from the ban on crypto mining in China, and Evergrande’s debt crisis.
It is known to the masses in the industry that China hosts about 60% of crypto mining activities, as the cost of energy is significantly cheaper. and China imposing a ban on mining has a significant impact on the industry.
Although Evergrande’s events don’t have any direct impact on the industry, the market tends to follow sentimental trends. Yet in the upcoming couple of days the next movement of the prices of the assets mainly Bitcoin can be speculated.
Evergrande’s Debt Crisis And Crypto Market
Evergrande group being the second-largest property developer in China by sales, and ranking 122nd globally by revenue, has shaken industries across disciplines. The biggest crypto by market share did follow similar trends.
Evergrande struggles to rebound, owing to its huge debt, and markets globally are suffering as the world remains interconnected. However, we can expect the market to consolidate if the Chinese government intervenes in support of the institution’s debt. We can expect a much slower rebound if things don’t prevail as per expectations.
The real-estate giant is expected to take the next plan of action on Thursday. As China market is on a holiday and will resume working on Wednesday. The main concern lies around the fact that how the stock market and the crypto market would behave, if Evergranade default debt to the banks!
What Can Be The Possible Scenarios?
As it’s clear that Evergranade is set to default their debt payments to the banks. However negotiations are going on but the outcome is pretty hazy. One possible scenario is the company could fire sale their assets to pay their debt. This could bring down the property prices of other companies as well.
Further these companies could liquidate their long position to be ready for the crash. This could pretty well impact the crypto space as well as a large chunk of investments have been locked here. And the companies would try to keep their cash reserves safe.
On the contrary, if the company gets some interim relief, the possibilities of a stabilized market are on higher side. But it is very unlikely to happen as the Chinese government has ruled out possibilities of bailing them out. Therefore the upcoming couple of days could be crucial for not only the stock market but also the crypto space.