Evergrande uncertainty sends Bitcoin tumbling
On November 10, after renewing the all-time high on the approaches to $69,000, bitcoin lost almost 9%. Many attributed this drop to conflicting rumors of a possible default by one of China's largest property developers, Evergrande.
China Evergrande Group is a diversified investment holding and second largest real estate developer in China with a debt of $305 billion. There are significant risks that the default of China's second largest property developer could trigger a wider financial crisis around the world.
According to CoinTelegraph, two minutes after the payment for Evergrande was due, Deutsche Markt Screening Agentur posted an announcement on Wednesday at 4:00 pm UTC that it was preparing for bankruptcy proceedings for Evergrande and urged affected parties to join the process. After a while, the Associated Press also disseminated information.
Is it Evergrande again?— Cointelegraph (@Cointelegraph) November 11, 2021
Conflicting news about whether Chinese property giant Evergrande had defaulted on its overdue loan payments emerged just before Bitcoin's recent price crash.
What really caused the lastest BTC dip? https://t.co/NYNDnjwFxm
Amid such news, the price of Bitcoin began to plummet and reached $62,800 at the bottom.
In reaction to hotter than expected #inflation data #gold rose $18, closing near $1,850 per ounce, its highest level in five months. But while #Bitcoin initially pumped to a new all-time high close to $69,000, the ensuing dump sent it tumbling 8.5%, back below $63,000 at the low.— Peter Schiff (@PeterSchiff) November 10, 2021
Nonetheless, Bloomberg published a rebuttal article and reported that Evergrande managed to avoid default for the third time, citing information from the clearing company Clearstream.
Bloomberg reporter Allison McNealy tweeted, "сontrary to what you may have heard ~on the internet~ Evergrande did not default today," the news helped stabilize the price of BTC.
contrary to what you may have heard ~on the internet~ Evergrande did not default today https://t.co/fsZPH8wFTG— Allison McNeely (@allisonmcneely) November 10, 2021
At the moment, Evergrande has to pay a total of $7.4 billion next year, of which $337.7 million by the end of this year.
China’s #Evergrande:— Gold Telegraph ⚡ (@GoldTelegraph_) September 6, 2021
- $300 billion in liabilities
- $7.4 billion in bonds due in 2022
- Bonds are now suspended
- Already missed debt payments this year
- Chairman recently stepped down from key unit role
This could destabilize global markets.
Amid the news about a potential default of Evergrande, U.S. 30-Year Bond Auction was held. Low demand in light of the US spike in consumer prices provoked a collapse in prices and a sharp jump in yields.
Prices for U.S. consumers jumped 6.2 percent in October compared with a year earlier as surging costs for food, gas and housing left Americans grappling with the highest inflation rate since 1990. https://t.co/tkrPBXdGWm— PBS NewsHour (@NewsHour) November 10, 2021
Against this background, the dollar strengthened significantly, causing pressure both in risky assets, as well as in gold and Bitcoin.