In a striking series of events, the recent Chapter 15 filing by Evergrande Group sent shockwaves that extended beyond the world of traditional finance, indirectly shaping the mood surrounding Bitcoin (BTC) and the overall cryptocurrency marketplace. Somewhat mysteriously, at around 9:35 pm UTC on August 17, the price of BTC fell by an alarming 8% in a mere 10 minutes. This unexpected downturn sent ripples throughout the entire digital currency ecosystem and left investors baffled.
This was followed by a substantial sell-off within the crypto markets over the subsequent 24 hours, causing Bitcoin to hit a two-month low, plummeting over 8% and falling below $25,659. Furthermore, ether followed suit, dropping to its lowest point since March at $1,576.
The unexpected market slide sparked a thicket of theories, but no clear cause was established. Rebecca Jones, CEO of Block3, released a commentary titled “Crypto market slide is just short-term noise”. The commentary primarily focused on the fleeting depreciation of the Chinese Yuan, triggered by Evergrande’s bankruptcy filing, being a plausible contributor to crypto price drop.
The comment thread on the recent BTC downturn suggested that while there were rumours tied to SpaceX’s potential divestment of Bitcoin, several external factors impacting the cryptocurrency world weighed heavily on the atmosphere in the market. Some of these components include the rise in US bond yields and the US bankruptcy protection filed by Chinese real estate giant Evergrande, which negatively reflected on the Chinese Yuan, thus indirectly affecting Bitcoin’s reputation.
Evergrande, formerly China’s top property developer, was found in 2021 to be dealing with a debt exceeding $300 billion. The financial struggles of Evergrande have turned it into an emblem for the broader property industry’s woes. Post Evergrande’s filing, the Chinese Yuan came across a severe devaluation, which analysts view as a potential factor for the market sell-off.
Despite these adversities, BTC and ether have exhibited signs of improvement recently. This rejuvenation is largely attributed to a series of promising occurrences, including the debut of Europe’s first-ever spot bitcoin ETF and Coinbase’s authorization for US futures. Thus, a recovery toward the $27,000 mark for Bitcoin is seen as an extremely positive sign to anticipate.