Prices of cryptocurrencies plunged on Monday as concerns over the spillover risk to the global economy from Chinese property group Evergrande’s troubles rippled over to wider markets.
Bitcoin, the world’s biggest and best-known cryptocurrency, tumbled more than 8 per cent to $42,453 (€36.193), its lowest level since Aug 7 before trimming some losses to trade down 7 per cent. It hit a near four-month high above $52,000 (€44.313) on September 6.
Smaller rival Ether, the coin linked to the Ethereum blockchain network, fell more than 10 per cent below $3,000 (€2,556) for the first time since early August.
Why are cryptos plunging?
The Chinese property group Evergrande is facing a debt of $300 billion (€255.7 billion) and possible collapse. On Monday the company’s Hong Kong-listed shares slid around 20 per cent on Monday. There is concern a collaps could disrupt many markets, including cryptos.
The loss in the value of cryptocurrencies comes at a time when institutional interest in the space has surged and some investment banks have ramped up their forecasts for cryptocurrencies in the coming months.
“Their fate seems a little tied to equities at the moment, and the price action is incredibly similar too,” said John Marley, CEO of forexxtra, a London-based FX consultancy.
Cryptocurrencies are also possibly facing a clampdown by US lawmakers and watchdogs, according to reports.
Last week, the Wall Street Journal reported the Biden administration is “preparing an array of actions, including sanctions, to make it harder for hackers to use digital currency to profit from ransomware attacks”.
What has been the effect on altcoins?
Bitcoin rival Ethereum has fared even worse, with the price of ether sheding almost nine per cent.
Meanwhile, altcoins are also suffering.
Cardano, Solana and Polkadot shed between 7 per cent and 12 per cent on Monday. And the meme-based Dogecoin has slipped from seventh to 10th place on the CoinMarketCap ranking. Ripple’s XRP is also down around 10 per cent.