We checked the current data: Bitcoin is at $64.4k this morning. The hourly chart of the cryptocurrency shows its recent record at $69,000. A sharp collapse followed, with the bottom reached at $62,822.


Bitcoin’s hourly chart

That said, as analysts suggest, the sharp rise to $69,000 was triggered by news of record inflation in the US over the past thirty years. The figure stood at 6.2 per cent at the end of October, something not seen since December 1990.

With bitcoin’s maximum supply capped at 21 million coins and the cryptocurrency itself showing excellent returns compared to traditional investment vehicles, the BTC exchange rate has seen a marked increase. Most likely, traders decided to take advantage of the good news for the coin and bet on the rise. However, it eventually stalled.

What will happen to Bitcoin?

Recall, Evergrande Group is a diversified Chinese investment holding company, which has long been one of the largest in its field. A few months ago, the company’s debt situation became so critical that the government had to start restructuring the holding company. Evergrande has not defaulted yet, but over the past few days a flood of contradictory news has made the market players quite tense. Let’s reconstruct the chronology of events.

Evergrande Group

At 16:00 UTC on Wednesday, one of the investors in the Chinese holding company Deutsche Markt Screening Agentur issued an announcement, according to which bankruptcy proceedings have been initiated in Evergrande after the holding allegedly defaulted on debt payments. Two hours later, the price of Bitcoin began to fall sharply and hit a local low of around $62,800.

Bitcoin price dynamics on the 4-hour chart

Morning Brew news publication 45 minutes after Deutsche Markt’s publication announced the default of Evergrande. Almost an hour later, news portal Bloomberg published its own note on the Chinese company, stating that the default rumours were not confirmed. As a result, Bitcoin’s price stabilised around $65,000.

William Fong, a senior trader at Australian cryptocap company Zerocap, told Cointelegraph that Evergrande is indeed officially “staying afloat” for now. Here’s the expert’s rejoinder, in which he shares his take on what’s happening. The quote is quoted by Cointelegraph.

Evergrande has not officially defaulted on its offshore debt on the international dollar bond market. In short, the $148 million [payment to Deutsche Markt – editor’s note] is nothing compared to the already existing debt of $300 billion.

This means that the news that was first released was not credible. However, the market was influenced.

Evergande shares fall

Fong is convinced that an official default of Evergrande is unlikely to take place, as the Chinese regulators are interested in maintaining the “financial health” of the company. Its eventual collapse could cause tangible damage to the local economy. On top of that, another stream of negativity about the holding company could hit all the major stocks in the world in general, Bitcoin and Tether stabelcoin.

Why Tether specifically? The fact is that the USDT tokens issued are not backed by the regular currency in the company’s reserves by 100 per cent. Most of them are securities and debt, which in theory could undermine the stability of the company, the stabelcoin itself, and the entire crypto market. However, Tether representatives have denied any connection to Evergrande shares, which means this assumption may not come true either.

It is important to note that the reason for such a sharp collapse was also traditionally the actions of margin traders. They used too much leverage - i.e. borrowed money of the stock exchange - for their trades. As a result, slump in the rate provoked closing and selling of their positions. This, in turn, caused an even bigger market downturn.

Cryptocurrency trader


We don't think Evergrande's possible default will necessarily affect cryptocurrencies badly. Still, the coins have shown incredible growth in recent months, and enough people outside the blockchain industry know that. Therefore, it is possible that investors will want to protect the value of their savings in the event of economic problems with digital assets. And buying them en masse will spur their growth.


What do you think about it? Share your opinion in our Millionaires’ Crypto Chat. There we will discuss other important news affecting the decentralized asset industry.