Bitcoin price tumbles as Evergrande news causes global financial panic
The last 48 hours have seen Bitcoin's price tumble to relative lows, with the digital currency now showcasing monthly losses of approximately 15%.
- China's Evergrande Group has reportedly defaulted on 2 of its largest loans, with regulators seeing no way for the firm to clear its outstanding debts anytime soon.
- Yesterday's crash saw 29 of the top 30 cryptos by total market cap register losses.
- Galaxy Digital's Mike Novogratz believes that as long as BTC stays above the all-important AUD$55k (US$40k) resistance, there is no reason for investors to worry about the asset.
The last 48-hours have been a roller coaster ride for Bitcoin, with the world's largest cryptocurrency shocking everyone by slipping to around the AUD$55k mark, albeit momentarily. As a result, the flagship digital asset is now exhibiting weekly losses of 10.5%. At press time, BTC is trading for $58,300.
It is worth noting that this fresh round of liquidations coincide with emerging news of China's mega-property development firm Evergrande Group being under a whopping debt of AUD$410+ billion, resulting in panic selling across various global markets. In this regard, pundits believe that the only way for the company to get back on its feet now is if the Chinese government intervenes.
On a more technical note, it should be highlighted that yesterday's crash comes after BTC was able to book profits in excess of 80% after hitting a local bottom of US$29,300 on 20 July. Not only that, yesterday's onslaught saw 29 of the top 30 crypto assets by market cap suffer substantial 24-hour losses.
Lastly, as per the crypto Fear & Greed Index, which serves as an indicator of the prevailing market sentiment, the bearish price action of the last 36-hours has come at a time when the market seems to be exhibiting "extreme fear". However, what's interesting to note is that just 30-odd days ago, this metric lay on the opposite end of the spectrum, signalling "extreme greed".
Bitcoin in "good shape" if it stays above AUD$55k, expert suggests
In a recent interview, crypto investment firm Galaxy Digital CEO Mike Novogratz stated that he believes there is no reason for investors to have any fear regarding Bitcoin unless the currency falls below the all-important AUD$55k (US$40k) psychological threshold. "I think the market got itself a little too long – the China news scared people. I see nothing but engagement and activity from our investing clients and our corporate clients," he added.
However, not everybody is convinced about Bitcoin's utopian, decentralised future, with Ray Dalio of Bridgewater Associates recently stressing that Bitcoin is a financial instrument that only has "perceived" rather than any sort of intrinsic value. He further added that regulatory bodies around the globe have the power to stifle the industry if they so choose, contrary to what many crypto maximalists claim. That being said, over the last few years, Dalio has changed his outlook towards BTC considerably, even adding the flagship crypto to his portfolio.
Disclosure: The author owns a range of cryptocurrencies at the time of writing