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 SP 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. «

Leave a Reply

Your email address will not be published. Required fields are marked *