Crypto market faces Bearish feelings as prices drop heavily
Global economic issues are developing huge impacts on digital assets’ value
The beginning of the week is being filled with bearish feelings as the world watches economic issues around the globe develop a cascade of consequences that took a hit in the crypto market as well.
Some of the events bringing even more concerns about a global situation are China's Evergrande debt crisis and the possible default on debt obligations by the US.
Bitcoin dropped to a low of $42,660 per unit and shed 8.9% in value. Ethereum (ETH) has dropped 10.3% in value during the last day and each ether is costing circa $3K. And the most critical situation amongst the top ten cryptos in market position is with XRP, shedding 13.8% during the course of the last day.
Since Bitcoin and cryptos are considered assets of risk and their fluctuation has impact from many economic factors in the world, cryptocurrencies have been shaky since Evergrande’s case got more complicated in the last days.
Evergrande is a Chinese real estate business that is having trouble with meeting the deadline for its debt payments. According to CNN Business, fear is getting bigger with the possibility of the company’s crisis affecting the financial system.
“Over the last few weeks, China's most indebted developer — which has more than $300 billion in liabilities — has warned investors of cash flow issues, saying that it could default if it's unable to raise money quickly”, the CNN report stated.
It also added that Evergrande holds about 6.5% of the total debt held by China's property sector, according to an estimate by UBS.
Another situation that has been troubling to investors is the US possible debt ceiling fallout. The secretary of US treasury, Janet Yellen, has already warned in the beginning of September 2021, through a letter to Congressional leadership in the country stating:
“The Treasury Department is not able to provide a specific estimate of how long the extraordinary measures [for debt ceiling] will last. However, based on our best and most recent information, the most likely outcome is that cash and extraordinary measures will be exhausted during the month of October
-Janet Yellen, US Treasury Secretary
All eyes are focusing on the development of those critical situations and investors are paying extreme attention to cryptos’ response to them.
Even with all the turmoil, on the other hand, others are making huge investments and “buying the dip” such as El Salvador’s President Nayib Bukele who is taking advantage of the moment and securing even more Bitcoins for his recent crypto-based economy.