The market value of cryptocurrencies declined to a low of $1.7 trillion by 5:14 a.m. IST on Wednesday from $2.12 trillion at 2:44 am IST on Monday, down 16.5 per cent in 48 hours, resulting in a loss of over $350 billion, according to the data from crypto portal CoinMarketCap. In the price loss tally, Bitcoin saw a price drop of 15 per cent from $47,211 to $39,876 during the said duration while Ethereum slipped nearly 18 per cent from $3,325 to $2,730. Even Solana, which attracted significant investor interest recently, declined 19 per cent from $152 to $122. Experts point it towards the impact of current China’s Evergrande crisis.
“The market got shaky when the rest of the world realised about the failure of the Evergrande property group and this led to a massive sell-off. This was seen by many as a Lehman Brothers crisis that triggered the 2008 recession. The drop of prices across various major cryptos ranged upwards of 6 per cent but given that crypto hedges itself due to its global market nature, the price drop that happened due to this alone should recover fast,” Sathvik Vishwanath, Co-Founder & CEO, Unocoin told Financial Express Online.
The decline followed the action in the global markets. The Evergrande default fears sparked Asian equities volatility and UK energy prices soar, putting the majority of energy providers at risk of insolvency while Wall Street saw equally worrying falls as the S&P fell 1.7 per cent on Monday, its worst trading day since May, Freddie Evans, a sales trader at digital asset broker GlobalBlock said in a note on Tuesday. “Fears of a global economic correction have intensified over the last few months, and Evergrande might perhaps be the catalyst… As expected, crypto followed global markets,” said Evans.
“Some have attributed the sudden dip (in Bitcoin) to the currently ongoing Evergrande situation in China which has already caused turmoil in traditional markets,” Jonas Luethy of GlobalBlock had said on Monday. The crypto market cap on Thursday evening had recovered to $1.98 trillion with Bitcoin share of nearly 42 per cent at $44,041, at the time of filing this report while Ethereum recovered to $3,113 and Solana to $148. Evergrade, among the biggest Chinese real estate developers, has caught regulations attention globally as its enormous debt burden of more than $300 billion could reportedly impact global markets and economies.
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