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Breaking News: BREAKING: Historic $109,500 Bitcoin High: Here’s What Analysts Predict Next
Picture of a bitcoin logo in the middle of a magnifying glass, with a yellow background

What Safe Haven? Bitcoin Behaves Like Risk-Asset During Evergrande Mayhem

Best Owie
by Best Owie
4 years ago
·
Posted in Bitcoin
Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure

Bitcoin has suffered in the wake of the brewing Evergrande crisis in China. The leading Chinese junk-bond issuer has now missed two loan repayments. Its connection to the broader crypto market has been linked to Tether. The company behind the dollar-pegged stablecoin is said to hold bonds with the Chinese bank, which is one of the ways that it backs its stablecoin.

Speculations of this adversely affecting the Tether coin, and by extension, the crypto market has been rife within the community. Tether features the most trading pairs with top cryptocurrencies like Bitcoin and Ethereum. Therefore, a crash within Tether would result in a crash across the market. Bitcoin has often been put forward as a way to mitigate against crises like these. But recent price trends in the digital asset have shown that this may not be the best course of action for investors.

Related Reading | Economist Calls Bitcoin “A Nobel Prize-Winning Diversification Strategy”

Bitcoin Struggling Amidst Evergrande Crisis

Bitcoin’s recent trends have shown the asset to be behaving like a risk asset. This comes in light of the current uncertainty in the market. Although bitcoin is supposed to not behave in the same manner as to risk assets, market conditions like the present one have proven the asset to move in an exact way. An example is bitcoin’s movements in March of 2020 when the market went down along with a global crash across financial markets.

Bitcoin price chart from TradingView.com

BTC price recovers above $43,000 | Source: BTCUSD on TradingView.com

One of bitcoin’s redeeming qualities in the face of these crises has been the asset’s use as a means of transfer and exchange. Given it’s not limited to a single investment utility, the asset finds subsequent success in its use as a way to transfer money and value from one party to another.

Shaking World Financial Markets

Evergrande’s current crisis has caused a ripple effect across financial markets around the world. Being on the brink of default, a bankruptcy of this kind threatens to leave lasting effects that will reverberate through financial markets for months, or perhaps years to come. Its spillover into the crypto space puts the market dangerously close to the beginning of another stretched-out bear market.

Related Reading | AMC CEO Casts Dogecoin To Join Star-Studded Crypto Lineup Of Bitcoin, Ether, & More

The effects of the missed payments on the part of Evergrande have led to dwindling values in major financial markets. In its wake, the Hang Send index had fallen 3.86% following Friday’s close. While in the diaspora, financial markets like the NASDAQ and the S&P suffer the aftershocks of Evergrande’s impending bankruptcy. The NASDAQ is down 2.2% on Monday and the S&P 500 closed the first day of the week at a 1.7% loss.

Bitcoin lost as much as $9,000 of its value following the crisis. When the digital asset’s price fell below $40,000 for the first time in over a month. Altcoins across the crypto market also experienced similar fates as the crisis raged on. Currently, the price of bitcoin has recovered about $4,000 of its lost value since Friday. But is still nowhere near its value before the Evergrande news broke.

Featured image from Forbes, chart from TradingView.com
Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.
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Best Owie is a Managing Editor at Bitcoinist with extensive experience and a proficient expert known for crafting captivating and insightful content. Best boasts over six years in the crypto sector, and has supervised the conception and publication of thousands of articles. Best is also a content and marketing strategist with the ability to make sure your content reaches the right audience and beyond. In every aspect, Best stands out as a consummate professional, always striving for unparalleled excellence both within and outside the workplace.

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