On Monday morning, the entire crypto market took a nosedive amid a global market sell-off. A key reason for this is the major debt default in China by Evergrande, the second-largest real estate company in the country. Part of the implication of this is that several popular digital currencies are now trading at their lowest in over a month.
According to CoinMarketCap, the value of global digital currencies plummeted to just under $1.9 billion early Monday. This represented an 11% loss within 24 hours, and a staggering overall price drop of $250 billion. Bitcoin alone dropped 9% to just under $42,670, while Ethereum fell 10% to a $2,940 low. The last time either of these two popular cryptos traded close to these respective price tags was back in early August.
Jonas Luethy of GlobalBlock, a digital asset broker, ascribed the prevailing market underperformance to Evergrande shares crashing by 85%. The real estate giant, which is suffering a massive $305 billion debt pile, set off a chain reaction within the equities market. Last week, Evergrande informed banks about its inability to make debt payments due this month. This caused a steep drop in the Chinese real estate sector. There was a huge sell-off as analysts forewarned of spillover effects from Evergrande’s potential collapse into the broader market.
In addition, Luethy also noted increasing regulatory scrutiny as a reason for the sell-offs. Binance, the world’s biggest crypto exchange is under fire from several regulatory bodies across multiple countries. The most recent highlight is a Bloomberg report on the US government probing the exchange for insider trading.
In the face of the ongoing market slump and uncertainty, El Salvador recently announced that it bought 150 BTCs. The nation’s Bitcoin holding now stands at 700 BTCs or $30.2 million.
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