The bitcoin exchange rate has fallen to its lowest level since early August. After a fairly bullish weekend, the market took a sharp turn to the downside on Sunday evening.
The digital currency is responding to the impending bankruptcy of Chinese real estate giant Evergrande and appears to be following regular stock exchanges around the world. The catastrophic crash wiped more than $200 billion from the crypto market, and affected not only bitcoin, but all other cryptocurrencies it appears to be on a downward trend, with no noticeable signs of recovery.
The value of bitcoin fell more than 8 percent in 24 hours. Based on CoinMarketCap, the bitcoin rate hit 37,000 euros on Monday, dropping to nearly 36,000 on Tuesday afternoon. A bitcoin was worth more than 44,000 euros two weeks ago on September 7.
Bitcoin didn’t always move along with the stock exchange, but it does look like it does now. This may be because digital currencies are increasingly being integrated into financial markets around the world.
Evergrand, China’s second-largest real estate group, is struggling with a debt pile of more than 300 billion euros and investors worry that the impending bankruptcy could have a domino effect on China’s real estate market. There is also a high chance that the debt will never be paid off.
Evergrande’s troubles began earlier this year when the Chinese property giant was short on cash, and it turned to its own employees with questions that sounded more like requests. Employees who wish to retain their bonuses must provide Evergrande with a short-term loan. This pressure led many employees to ask friends and family for money to lend to the company. Workers even borrow from banks. But then Evergrande suddenly stopped paying back his loans.
Last week the chaos was over when hundreds of employees gathered outside company offices across China to protest, joining unhappy home buyers. The workers demanded their money back.
Evergrande has now become China’s most indebted company. It owes money to foreign lenders, suppliers and investors. It owes unfinished apartments to homebuyers and has amassed more than $300 billion in unpaid bills. Evergrande is facing lawsuits from creditors and has seen its stock lose more than 80 percent of its value this year.
If Evergrande can’t pay off its debts, it will become a real problem for the hundreds of financial institutions that have borrowed from the group, and the world could face another debt crisis. Worried investors are keeping an eye on whether Evergrande will be able to pay interest maturing on bonds, next Thursday.
