- Bitcoin dropped $5,000 overnight in a response to legacy markets’ fears
- Chinese giant Evergrande is in deep financial trouble, and global markets are jittery
- Bitcoin has followed legacy markets in falling in recent days
Bitcoin joined legacy markets in starting the week in the red, mainly due to jitters over the Evergrande affair in China. After hitting $48,900 on Friday night, Bitcoin has been following a downward path to $45,100, dropping $5,000 last night alone. This echoes the negativity seen in the DJI, S&P500, NASDAQ and other legacy markets due to the problems surrounding China’s biggest residential developer, which has $300 billion in liabilities and $15 million in assets and may need a massive bailout from the Chinese government.
Bitcoin Rolls Over
Bitcoin had been showing a reasonable recovery from its swift $10,000 drop two weeks ago, but has rolled over in the last few days:
The reason for this seems to have been general uncertainty in the markets following the perpetually bad news coming out of China over Evergrande, the Fortune Global 500 enterprise that is massively in debt and whose share price has plummeted in recent days.
The collapse is so severe that there are worries it could precipitate a 2008-style domino effect and lead into another financial crisis, which has seen indexes in legacy markets notching up downturns themselves, although in truth they had spent September cooling down anyway, in accordance with the September curse.
Reasons to be Hopeful?
If Bitcoin can reclaim the region at $46,500 and turn that back into support then this could turn out to be a temporary drop, but with the uncertainty in the markets, a return to the $44,000 or $41,000 region could well be on the cards, where we can expect strength to return, or at least a base to be formed for some strength in the last quarter of the year:
A strong Q4 of course is assuming that the Evergrande mess doesn’t turn into the next financial crisis, which analysts say doesn’t seem to be likely given how localised the company is:
What’s happening with the real estate sector in China & will you see a 2008 because of China’s Evergrande looking at a possible bankruptcy?
— Kirtan A Shah (@KirtanShahCFP) September 20, 2021