Today's crypto dip - what does a Chinese real estate corp have to do with it?

[NotATether]

As you probably noticed, BTC dipped from $45K to $42K today, and ETH dipped from $3.5K to $2.9K. Other popular cryptos are also down by larger amounts.

With the virus still dominating investor concerns, markets were jolted by news of Evergrande, a major Chinese real estate company that's teetering on the brink of default. China's potentially slowing economy, and Beijing's aggressive actions against key business sectors, have converged with worries about the global economy. Meanwhile, a fight is brewing in Washington over raising the U.S. debt limit.

Source: Yahoo Finance

I just don't understand how a real estate company's problems have anything to do with cryptos. Stocks, sure, I get it, but why would people sell crypto when this kind of news appears?

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[jackg]

It's probably just fear in the market in general. It normally doesn't make sense to sell something unless you're big enough to manipulate it (someone might have just tried their luck with that)...

I thought evergrande had started some sort of recovery? The initial news was they couldn't pay a bond but they've now found a way to do that.

It might be likely companies just start reissuing bonds too at a lower interest to pay off their old ones ~5-7% is quite high now and they could probably drop to around 3 (or just hope for a government bailout to help them through a few months to see if they can survive).

[suchmoon]

Unfortunately Bitcoin is more and more entangled with the financial markets. And when drama like Evergrande happens (I've heard it being called "the Lehman Brothers moment"), you get the "conventional" investors dumping everything they can, including those bitcoins they got because everybody did. It's ironic considering Bitcoin's origins date back to the real Lehman Brothers crisis and we should in theory see the opposite movement, what with the whole intent being anti-bank safe haven.

or just hope for a government bailout to help them through a few months to see if they can survive

The government said (through state media) that they won't bail it out. Not that they couldn't change their mind if it really gets out of control.

[aoluain]

Yes for good or bad crypto is now intertwined in the portfolios of traditional investors
with traditional FIAT based investments and they treat Crypto he same, so when they
need to act with their investments like this current [i call it a potential black swan event]
they have to move and sell and trade.

Also there is the ripple or domino effect in the crypto markets when something like Evergrande
comes along where leveraged trades [long positions in this case] get liquidated which drives
the price down which liquidates more long positions and so on and so on. This also leads to
some people reacting with FUD and selling unnecessarily.

As you probably noticed, BTC dipped from $45K to $42K today, and ETH dipped from $3.5K to $2.9K. Other popular cryptos are also down by larger amounts.

Have you noticed yesterday we dipped below $40k ! a lot of long positions got rekt

[LFC_Bitcoin]

Whales use it as an opportunity to tank the market too. Every pathetic, weak pair of hands that sell help to cascade the price lower too. Don’t give them your bitcoin cheap, it’s all just noise. We will see multiple ATH’s before the end of the year.

[Silberman]

As you probably noticed, BTC dipped from $45K to $42K today, and ETH dipped from $3.5K to $2.9K. Other popular cryptos are also down by larger amounts.

With the virus still dominating investor concerns, markets were jolted by news of Evergrande, a major Chinese real estate company that's teetering on the brink of default. China's potentially slowing economy, and Beijing's aggressive actions against key business sectors, have converged with worries about the global economy. Meanwhile, a fight is brewing in Washington over raising the U.S. debt limit.

Source: Yahoo Finance

I just don't understand how a real estate company's problems have anything to do with cryptos. Stocks, sure, I get it, but why would people sell crypto when this kind of news appears?

It is not difficult to see how this can affect the market of cryptocurrencies, now institutional investors are part of this market and while some have made their decision public there are probably many that are not doing so, so while a company in China facing bankruptcy seems to have not relation to this market it does, if the stock markets go down then people need liquidity and that liquidity is gained by selling not the worst assets on their portfolio but the best, and in most cases if they are holding bitcoin then that is the best asset they have on their portfolio.

[buwaytress]

Whales use it as an opportunity to tank the market too. Every pathetic, weak pair of hands that sell help to cascade the price lower too. Don’t give them your bitcoin cheap, it’s all just noise. We will see multiple ATH’s before the end of the year.

Won't be surprised if Evergrande themselves did this to get in cheap on BTC ala Jamie Dimon style a couple of years back when he dropped crap on Bitcoin before his bank went in big on it. El Salvador was very happy to get this unexpected bargain.

We've been here before, we'll be here again. Like you said, brother, everything in between is noise. Be wise to keep our eyes trained on the horizon cause them swells gonna cloud our view all the time.

[crwth]

Maybe many people have been able to liquidate some of their holdings to compensate for what they have lost. I saw that the real estate company kept being aggressive by getting loans, purchasing lands, and building buildings. It's just sad that the pandemic strikes them, and many people have lost their will to work there. I remember they were asking to lend cash to stay afloat, so I'm not sure how the workers would respond.

[Poker Player]

Yes, I agree with the previous answers that point out that, like it or not, the Bitcoin is linked to what happens in the financial markets, as I commented in another thread as well, what happens is that there is one thing that essentially distinguishes the Bitcoin and that is its limited supply. The clash between demand and supply has to explode.

In the case we have had of Evergrande, and as I commented in other threads as well, if we had a crisis like that of March 2020, I believe that the Bitcoin would be affected downward at first by the panick selling, but the moment it recovers it will go much higher than any other financial asset because of its intrinsic characteristics.

[hugeblack]

Movements of +/- 5% should be considered normal due to the decentralization of supply and demand and therefore we should not ask why they happened?

When such a question is asked, there should be no answer, and therefore TV channels and others tend to search for the hottest event and link it to it, and thus you will find a link between Bitcoin and many economic events that are not related to them.

There is no direct link between Evergrande and the price of Bitcoin and the most that could be is the whale trying to panic buying at a low price.

[Silberman]

Movements of +/- 5% should be considered normal due to the decentralization of supply and demand and therefore we should not ask why they happened?

When such a question is asked, there should be no answer, and therefore TV channels and others tend to search for the hottest event and link it to it, and thus you will find a link between Bitcoin and many economic events that are not related to them.

There is no direct link between Evergrande and the price of Bitcoin and the most that could be is the whale trying to panic buying at a low price.

This is incredibly common, most of the time those explanations come after the fact, the price moves and then they try to justify what is happening with a news that happened recently, when in fact small movements cannot really be attributed to any reason in particular and are just part of the cycle of supply and demand, and in fact many times even with big movements it is very difficult to determine if a news had an effect on the market, but there are exception as it was the case with the crash we saw on March last year which can be attributed to the panic caused by the pandemic.