Bitcoin Drops To Nearly $ 40,000 Amid Fears Of China’s Debt Crisis

Bitcoin’s bull run in 2021 ended in June when Chinese regulators cracked down on cryptocurrency miners. Bitcoin, Ether, and almost every other cryptocurrency saw a steep drop on Monday night, and it seems to be tied to activity in China again, albeit of a different kind this time around.

The price of Bitcoin has fallen over 11% in the past 24 hours, standing at just over $ 41,600 at the time of writing. The cryptocurrency almost fell below $ 40,000 when it fell to $ 40,500 at 5:30 p.m. PT. It would be the first time the price of Bitcoin has fallen below $ 40,000 since early August. Bitcoin’s all-time high was $ 64,863, reached on April 14.

Ether, the second largest cryptocurrency by market cap but the most used currency in crypto transactions, is down 12% in the last 24 hours. It sits at just over $ 2,900, the first time it has fallen below $ 3,000 since August 8. Dogecoin is near 20 cents, down from its making headlines at 70 cents in May.

Being a decentralized system, it is often difficult to say precisely what is causing the cryptocurrency markets to crash. Monday’s price action is said to be tied to the Chinese real estate market and in particular to Chinese company Evergrande Group. Evergrande is the world’s most indebted real estate company, with over $ 300 billion in liabilities, and markets around the world have abandoned fears that China will allow Evergrande to default on those debts.

The Dow Jones Industrial Average is down 1.78%, while the Hong Kong Hang Seng Index is down 3.38%.

If Evergrande defaults, it could have a dramatic effect on the entire Chinese economy, which in turn could affect countries around the world. The collapse of Evergrande has been compared to the Lehman Brothers bankruptcy that preceded the global financial crisis, although its impact is likely not so fierce. Evergrande shares have fallen 85% in the past year, and its offices across China have seen protests from aggrieved employees, builders and homeowners.

It has been a tumultuous month for Bitcoin, which surged in late August and early September in anticipation of cryptocurrency legal tender in El Salvador, a world first. The deployment of Bitcoin in El Salvador has been hampered by some technical issues, which apparently scared off big investors and caused big sales.

Chinese authorities slumped cryptocurrency markets in June after officials have made it clear that a 2013 ban on mining and other cryptocurrency-related services will be more strictly enforced. This is part of a wider crackdown on tech companies underway in China right now, which saw authorities targeting companies like Ant Group, Didi and ByteDance.