Bitcoin, cryptocurrencies tumble as China sends shudders down markets – Yahoo Finance - Newstrend Times

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Monday, September 20, 2021

Bitcoin, cryptocurrencies tumble as China sends shudders down markets – Yahoo Finance

Investors unnerved by the financial strains of a Chinese real estate firm sent cryptocurrencies reeling on Monday, with bitcoin (BTC-USD) tumbling by more than 7%.

As risk-sensitive assets plunged, the leading digital coin shed over $3,000, changing hands just below $44,000 in midday trading. The moves were the latest signal that the world’s largest cryptocurrency hasn’t achieved the “safe haven” asset status that some of its more ardent proponents have promoted, even as debt levels around the world surge in response to COVID-19.

With the virus still dominating investor concerns, markets were jolted by news of Evergrande, a major Chinese real estate company that’s teetering on the brink of default. China’s potentially slowing economy, and Beijing’s aggressive actions against key business sectors, have converged with worries about the global economy. Meanwhile, a fight is brewing in Washington over raising the U.S. debt limit.

The spillover effects were apparent across the crypto world. According to CoinmarketCap, top payment networks such as Ethereum (ETH-USD), Cardano (ADA-USD), Binance Coin (BNB-USD) and Solana (SOL1-USD) have all sustained even deeper losses than bitcoin in the past 24 hours: all were off by at least 8% on the day. 

According to blockchain analytics platform Glassnode, the 7-day moving average for the number of Bitcoin wallet addresses sending money to crypto exchanges has reached a 3-month high, signaling intensifying selling pressure and speculative trading. 

Given the fees associated with moving crypto on and off most centralized crypto exchanges, this rising flow volume to exchanges is one indicator that BTC holders could be looking to sell. Meanwhile, overall balance of crypto on exchanges continues to decline this week.

Though the value of BTC is often described as digital gold, acting like a store of value asset that doesn’t correlate with the stock market, its price decline in the last 24 hours shows signs that the Bitcoin price today is responding to the risk tolerance of investors.

Nik Bhatia, a crypto watcher and author of the macro-economics focused cryptocurrency book, “Layered Money,” flagged bitcoin’s tight link to risk assets in his newsletter last Friday, saying the digital coin has “battled a narrative of equity-market correlation.” 

Pointing to its correlation with the pandemic-driven stock market crash in March 2020, Bhatia said that “bitcoin responds to the global macro environment and is itself a product of it.”

Pete Humiston, a manager working on the market intelligence side of the crypto exchange, Kraken, said Bitcoin is “an emerging store of value” that’s much more volatile than equities. However, “it does have a tendency to be strongly correlated with stock from time to time.”

In fact, since hitting a September high of almost $53,000 after El Salvador officially introduced bitcoin as legal tender, the crypto unit is off by more than $8,000. 

David Hollerith covers cryptocurrency for Yahoo Finance. Follow him @dshollers.

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For more information about cryptocurrency, check out:

Dogecoin, what is it? How to buy it

Ethereum: What is it and how do you invest in it?

The top 21 crypto leaders to watch in the back half of 2021

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