{"id":143652,"date":"2023-09-01T17:30:45","date_gmt":"2023-09-01T12:00:45","guid":{"rendered":"https:\/\/dripp.zone\/news\/?p=143652"},"modified":"2023-09-01T17:30:45","modified_gmt":"2023-09-01T12:00:45","slug":"the-bright-side-of-evergrandes-collapse-more-crypto-volatility-crypto-news","status":"publish","type":"post","link":"https:\/\/dripp.zone\/news\/the-bright-side-of-evergrandes-collapse-more-crypto-volatility-crypto-news\/","title":{"rendered":"The bright side of Evergrande\u2019s collapse? More crypto volatility – Crypto News"},"content":{"rendered":"
\n

As Evergrande Group, China\u2019s heavily indebted property developer, files<\/a> for bankruptcy in the United States, many are concerned about how this will impact the global economy and cryptocurrencies<\/a>. The situation represents one of the largest debt faultings in the world and will have sizable ramifications.<\/p>\n

However, it shouldn\u2019t come as too much of a surprise that China\u2019s real estate agent running out of money to cover debt is causing worry within the crypto space. While many fear Evergrande\u2019s collapse will cause a knock-on effect for other tokens and coins already vulnerable in financial markets, the increased crypto volatility could be the silver lining for investors.<\/p>\n

Market uncertainty and volatility<\/h2>\n

The collapse of a significant financial player like Evergrande could generate uncertainty and volatility across all asset classes, including cryptocurrencies. There\u2019s no denying the crypto market is volatile. In other words, even the slightest hit to the status quo can cause the price of even the biggest cryptocurrencies to go down the dumps or through the roof.<\/p>\n

Related: <\/em><\/strong>BlackRock\u2019s misguided effort to create \u2018Crypto for Dummies\u2019<\/em><\/strong><\/a><\/p>\n

This is even the case for Bitcoin (BTC<\/a>). Cryptocurrencies are falling as concerns around China result in risk off-sentiment. Leading analysts have reported that the downturn in the crypto market is no big deal. However, investors are still in a hurry to liquidate their crypto funds<\/a>. This is likely due to the fear of China\u2019s crisis disrupting the biggest worldwide financial balance. <\/p>\n

\n

Evergrande, one of China\u2019s real estate giants, just filed Chapter 15 bankruptcy.<\/p>\n

Meanwhile, China\u2019s HY real estate index is down a massive 82% in just over 2 years.<\/p>\n

This puts the index back down to 2008-levels.<\/p>\n

All while China just \u201cunexpectedly\u201d cut interest rates.<\/p>\n

Is China\u2026 pic.twitter.com\/p3yuIqPmxL<\/a><\/p>\n

\u2014 The Kobeissi Letter (@KobeissiLetter) August 18, 2023<\/a><\/p><\/blockquote>\n

Investors may either flee to cryptocurrencies as a hedge against traditional markets or sell off crypto assets to cover losses elsewhere. Additionally, volatility is being harnessed by professional traders to book profits by selling during recovery and purchasing the dip. Bitcoin miners, then, are holding on to their funds even as it becomes increasingly challenging to mine for the cryptocurrency.<\/p>\n

Liquidity crunch<\/h2>\n

If Evergrande\u2019s collapse results in tightened credit markets, liquidity could become scarce. Cryptocurrency may be liquidated en masse to cover losses or meet margin calls, causing a temporary price drop. Tether (USDT<\/a>) accounts for around half of the market capitalization of stablecoins and is a significant component of crypto market liquidity. <\/p>\n

Tether is quite active in Asia, and there was some concern that some of USDT\u2019s backing would be Evergrande commercial paper. Therefore, the collapse in Evergrande would be poor news for Tether and the market as a whole. While Tether issued a statement recently stating it does not hold any Evergrande paper, that doesn\u2019t mean it is entirely free from Evergrande-related risks. Ultimately, this situation could cause a broader liquidity crisis within the industry.<\/p>\n

Influence on Chinese cryptocurrency activity<\/h2>\n

There\u2019s no denying the Evergrande collapse is occurring at a delicate time for China\u2019s economy. The fallout from the collapse has affected banks, smaller suppliers, and even worldwide markets exposed to Evergrande\u2019s debt. Considering that Evergrande is a Chinese company, its collapse could have specific implications for crypto markets in China. <\/p>\n

These implications come from concerns about Tether\u2019s holdings and that crypto is vulnerable to downturns in the broader market. Given China\u2019s complex relationship with cryptocurrencies, any financial instability could lead to regulatory shifts that impact crypto adoption or trading within the country. It\u2019s clear Evergrande\u2019s challenges are part of a much larger set of issues within the sale of Chinese equities in global markets.<\/p>\n

Macroeconomic consideration<\/h2>\n

While the collapse of Evergrande may seem as though it is about nothing more than the company, there is more to it. China is one of the world\u2019s leading economies, and Evergrande is one of the largest companies within the Chinese economy.<\/p>\n

Therefore, the fallout has presented significant macroeconomic implications. If a broader economic downturn is yet to come, cryptocurrencies could benefit as a \u201csafe haven\u201d asset. Due to their limited supply and lack of dependence on national governments, crypto assets can be key in times of crisis.<\/p>\n

Additionally, cryptocurrency prices seem to be less affected by macroeconomic elements than prices of more traditional financial assets. Paradoxically, financial crises often lead to increased innovation and adoption of alternative financial systems.<\/p>\n

Related: <\/em><\/strong>Binance caves to pressure over coin listings, scoring a win for privacy<\/em><\/strong><\/a><\/p>\n

In other words, in times of desperation, leaders and developers are encouraged to engage in outside-the-box thinking and devise effective and unique solutions. Bitcoin, for example, was born after a crisis, and the crypto market was developed as an alternative to the traditional economy.<\/p>\n

It\u2019s difficult to say whether events that occur in the broader economy will truly threaten crypto markets. A global economic slowdown ideally shouldn\u2019t materially impact the price of cryptocurrencies, and crypto should be considered a speculative asset.<\/p>\n

Therefore, Evergrande\u2019s collapse could be an opportunity for the crypto market. The collapse of these traditional structures and encouraging a separation between the traditional and crypto economies could accelerate interest in decentralized finance solutions.<\/p>\n

\n

Daniele Servadei<\/strong>\u00a0Is the 20-year-old founder and CEO of Sellix, an Italian e-commerce platform that has processed more than $75 million in transactions for more than 2.3 million customers worldwide.\u00a0He’s also attending the University of Parma for a degree in computer science.<\/p>\n<\/div>\n

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

As Evergrande Group, China\u2019s heavily indebted property developer, files for bankruptcy in the United States, many are concerned about how this will impact the global economy and cryptocurrencies. The situation represents one of the largest debt faultings in the world and will have sizable ramifications. However, it shouldn\u2019t come as too much of a surprise […]<\/p>\n","protected":false},"author":2,"featured_media":143653,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[235,203,210,234,231,232,237,238,236,233],"class_list":["post-143652","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blockchain","tag-bitcoin","tag-crypto-currency","tag-elon-musk","tag-ethereum","tag-hyperledger","tag-ibm","tag-mining","tag-nodes","tag-spacex","tag-tesla"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/143652","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=143652"}],"version-history":[{"count":2,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/143652\/revisions"}],"predecessor-version":[{"id":146220,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/143652\/revisions\/146220"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/143653"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=143652"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=143652"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=143652"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}