18.10.2021

Against the background of “extreme fear” bitcoin dropped to $ 39,500 and moved to a recovery

Bitcoin price that night fell to $ 39,500, thus setting a new low in a month and a half. Ether at the same time fell below $ 2,700. At the time of publication, the two cryptocurrencies are again trading at $ 42,000 and $ 2,850, respectively.

The recovery came after the announcement that debt-ridden Chinese property developer Evergrande is ready to pay its bond coupon on September 23rd. Amid the news, the US stock market, the yuan and the risk-sensitive Australian dollar soared higher, while defensive assets, including the yen and US government bonds, declined. Bitcoin, in turn, has recently shown an increased correlation with the S&P 500 index and has also grown.

Nonetheless, as Bloomberg notes, it is too early for investors to relax, as we are talking about yuan-denominated local bonds, while the fate of the company’s offshore obligations remains unknown. The amount due on Thursday is $ 119.5 million, of which only $ 36 million is in domestic liabilities. On Monday, Evergrande already defaulted on payments to at least two of its bank creditors.

The decline in bitcoin over the last 5 days was almost 20%. At the same time, the entire cryptocurrency market, with rare exceptions, is in the red, despite a 2-5% rise in the last hour. According to the Fear and Greed Index, cryptocurrency investors find themselves in a state of “extreme fear”, although Bitcoin is now trading 45% higher than two months ago.

Galaxy Digital founder Mike Novogratz on Tuesday said he “won’t be nervous” until the cryptocurrency drops below $ 40,000:

“I think the market has become somewhat too optimistic, and the news from China scared everyone. $ 40,000 for bitcoin and $ 2,800 for ether are very important levels. I think the market is in good shape as long as they hold on. Our investment and corporate clients are exclusively engaged and active. “

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