- Cryptocurrencies plummeted 11% in the Monday morning session
- Bitcoin prices decreased 9% and ether prices fell over 10%
Many of the world’s top digital currencies fell to their lowest levels in more than a month. Monday morning following a global market sell-off spurred by fears of a possibly catastrophic debt default in China.
As per CoinMarketCap, the value of the world’s cryptocurrencies had dropped to less than $1.9 trillion by 8:45 a.m. EDT on Monday. It went down about 11% from the previous day and represented a loss of more than $250 billion.
Bitcoin prices plunged 9% to less than $42,669, while ether prices fell over 10% to a low of $2,940, marking their lowest levels since early August. At the height of the sell-off, even lately soaring tokens like Solana’s sol and Cardano’s ada plummeted by approximately 10%.
Triggering the Pullback
The sudden pullback, according to Jonas Luethy of digital asset broker GlobalBlock, occurred after shares of Chinese real estate giant Evergrande, which has more than $ 305 billion in liabilities, fell to its lowest level in 11 years, triggering a sharp sell-off as analysts warned that the company’s potential collapse could pose risks to the broader market.
Luethy also blamed increased regulatory scrutiny for the panic selling, citing Bloomberg’s revelation over the weekend that Binance, the world’s largest cryptocurrency exchange, is being investigated by US regulators for alleged insider trading and market manipulation.
El Salvador’s President, Nayib Bukele, announced the nationalisation of the country as prices plummeted for the second time this month. The country had spent $6.5 million to bolster the cryptocurrency holdings by 150 bitcoins.
China’s Behemoth decision
Last week, Evergrande, China’s second-largest property developer, informed banks that it would be unable to fulfil debt payments due this month, causing the Chinese real estate market to plummet. The losses quickly spread to other markets as experts warned that its default could trigger a Chinese “Lehman moment,” as market analyst Tom Essaye, author of the Sevens Report, put it in a note last week.
He was referring to the collapse of the U.S. investment bank Lehman Brothers at the start of the Great Recession. There isn’t enough clarity on how Evergrande’s problems will affect the global economy, and that uncertainty is enough to frighten investors, said David Bahnsen of The Bahnsen Group in California.
Along with historic adoption measures, interest in digital collectibles known as non-fungible tokens and concerns about rising inflation have helped the cryptocurrency market pare back losses since Chinese regulation sparked a nearly 50% drop in early May, though it’s still down nearly 25% from its all-time high four months ago.
JPMorgan analysts warned in a report earlier this month that the recently expanding market for smaller cryptocurrencies less established than bitcoin likely reflects “froth and retail investor enthusiasm,” noting that such mania has previously resulted in almost 50% price corrections.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.