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Cryptocurrency prices plunged Monday morning in a widespread market selloff triggered by fears of a potentially catastrophic default in China, pushing many of the world’s largest digital currencies to their lowest levels in China. more than a month.
The world’s largest cryptocurrencies have fallen to their lowest prices in over a month.
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Highlights
The value of global cryptocurrencies plunged to less than $ 1.9 trillion as of 8:45 a.m. EDT on Monday, nearly 11% lower than 24 hours earlier and reflecting a loss of more than $ 250 billion, according to the site. CoinMarketCap Crypto Data Web.
In the face of losses in market value, the price of bitcoin fell 9% to below $ 42,669, while ether prices fell nearly 10% to a low of $ 2,940, marking each of their lowest levels since early August.
In a Monday note, Jonas Luethy of digital asset broker GlobalBlock said the sudden pullout came after shares of Chinese real estate giant Evergrande, which has more than $ 305 billion in liabilities, plunged. at their lowest level in 11 years, triggering a sell off as analysts warned the potential collapse of the company could pose risks to the broader market.
Luethy also pointed to increased regulatory oversight as the reason for the panic sellout, with Bloomberg reporting this weekend that Binance, the world’s largest crypto exchange, is under investigation by U.S. regulators for d ” possible insider trading and market manipulation.
As prices plummeted, Salvadoran President Nayib Bukele announced that the country had taken advantage of the drop in prices and “bought the drop” for the second time this month, spending around $ 6.5 million on increase their cryptocurrency holdings by 150 bitcoins.
Tangent
Evergrande, China’s second-largest real estate developer, alerted banks last week that it would not be able to repay its debt this month, causing the Chinese real estate sector to drop sharply. The losses quickly spread to wider markets as experts began to warn that its default could potentially create a Chinese “Lehman moment,” wrote market analyst Tom Essaye, author of the Sevens report, in a note. last week, referring to the US investment bank that collapsed at the start of the Great Recession. “There is not enough clarity on how the challenges of Evergrande may affect the global economy and this uncertainty is enough to scare the markets,” said wealth advisor David Bahnsen, of California group The Bahnsen. , in an email Monday.
Key context
Along with historic adoption measures, the buzz around digital collectibles known as non-fungible tokens and concerns about increased inflation have helped the cryptocurrency market cut losses since regulation in China. triggered an almost 50% crash in early May, although it was still down almost 25%. from a record high four months ago. In a note earlier this month, analysts at JPMorgan warned that the recently booming market for smaller, less established cryptocurrencies than bitcoin likely reflected “the moss and retail investor mania,” and said pointed out that such a mania has historically resulted in corrections of almost 50%.
Further reading
Solana’s market value plunges by $ 20 billion after outage, is it good for Ethereum? (Forbes)
Inside the coming war for money and cryptos (Chez Barron)
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