- Bitcoin is down 2.5% in the past 24 hours, but has rebounded from its low of $US40,267 ($AU55,470) late Monday.
- Cryptocurrencies are trying to shake off losses driven by worries about Chinese property giant Evergrande.
- Ether, cardano’s ada, solana’s sol and other altcoins are recovering after steep falls.
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Bitcoin hovered at around $US43,000 ($AU59,235) on Tuesday as it recovered somewhat from a broad crypto sell-off prompted by fears about Evergrande’s potential debt default, but the cryptocurrency has yet to recoup its losses.
Bitcoin was trading at $US42,704 ($AU58,827) as of 10 a.m. ET, a fall of about 3% in 24 hours, but up from Monday’s lowest price of $US40,267 ($AU55,470), according to CoinDesk data.
The threat of possible loan defaults by Chinese property developer Evergrande shook cryptocurrencies alongside other markets on Monday, as investors worried about whether the losses would spread into the wider financial system.
Altcoins were also mainly making up ground, but faced an uphill struggle as investors appear to remain uncertain as to whether the Chinese property giant’s crisis will spill over into crypto coin prices.
Ethereum’s token ether was down 2% at $US3,036.69 ($AU4,183) having broken below $US3,000 ($AU4,133) on Monday with a low of $US2,811.83 ($AU3,873). Cardano’s ada was trading at $US2.17 ($AU3), down almost 0.5%, climbing back from a $US1.97 ($AU3) low during the height of the sell-off, according to CoinDesk data. On Coinbase, solana’s sol is down 3% at $US140.53 ($AU194) after it hit a low of $US125 ($AU172) Monday.
“I don’t think we’ll see any kind of positive price action until we have clarity about the Evergrande problems,” James Butterfill, an investment strategist from CoinShares, told Insider.
Evergrande has indicated it may not be able to pay upcoming bond interest payments due Thursday. It owes more than $US300 ($AU413) billion to bondholders and banks, making it the most indebted company in the world.
Given the size of the debt, if Evergrande were to default, it could spark a sell-off in Chinese markets, including crypto, Butterfill said.
“There are a lot of Chinese holders of crypto. Now if there’s some sort of significant economic malaise, or big sell-off, people will be looking for liquidity, looking for things to sell – and bitcoin being very liquid, it will be easy to sell,” he explained.
“I think as a consequence there will be selling pressure on Thursday if there is a broader contagion from Evergrande,” he added.
Bitcoin could get a boost if the Chinese government decides to step in and rescue Evergrande, according to Butterfill.
“If we see a government bailout and (the contagion) is very well contained I think we will see quite positive price momentum for bitcoin so, until we have that kind of uncertainty clarified about Evergrande on Thursday, I think it’ll just tread water for now,” he said.
He did note that a lot of crypto activity moved out of China in July in the wake of the government’s crackdown, and that bitcoin’s lack of links to the financial system there should insulate it from the Evergrande crisis somewhat.
“I don’t think it will cause long-term problems for bitcoin because it in many ways is still quite disassociated from the Chinese economy, but it will probably behave like a risk asset when the crisis really unfolds,” Butterfill said.