Colin Wu opines on the main reason for the blow made to the global crypto market, says the Chinese real-estate market is to blame
Chinese journalist Colin Wu, who covers everything related to the cryptocurrency market, has tweeted that the Hong Kong stock market has plunged. In particular, Hong Kong’s Hang Seng index lost almost 7% on that day, reaching a 52-week low.
The Hong Kong stock market plummeted, triggering a decline in global markets and cryptocurrencies. The main reason is Evergrande, China's largest real estate company with nearly 2 trillion debts. Tether just clarified that it does not hold Evergrande commercial votes.— Wu Blockchain (@WuBlockchain) September 20, 2021
Hong Kong stock market plummets
According to Colin Wu, the bloodbath faced by the global crypto market has been caused by the decline of Evergrande Real Estate Group’s stock collapse by 10.24%.
Prior to that, the index fell 17% as well. According to the 2021 Fortune Global 500 List, the Evergrande Real Estate Group is the second-largest property developer in China by sales. It is also the 122nd largest group in the world by profit.
Other Hong Kong real estate giants have also faced a massive stock sell-off, among them Henderson Land Development Co.
According to Wu, Evergrande has debts worth almost $2 trillion. The growing concerns about the debt crisis of one of the largest real-estate companies has hit a wide range of markets: from bank shares to high-yield dollar bonds and Ping An Insurance Group Co. stocks as well.
Bitcoin faces $312 million in liquidations as the Chinese news hits crypto
As reported by U.Today previously, the flagship cryptocurrency had dropped by almost 9%, dropping from the high of $48,700 on Saturday to $44,436 earlier today.
The Bitcoin market witnessed a massive amount of liquidations worth a whopping $312 million in a single hour. On the Bybit exchange alone, nearly half of Bitcoin positions were liquidated: $153 million.
Data from crypto exchanges shows multiple surges of the BTC supply, which may lead to a further sell-off if Bitcoin keeps declining below the $45,000 support level. At press time, the leading digital currency is changing hands at $44,900 per coin.
The altcoin market is also in the red today after taking a painful blow from the news about Evergrande Real Estate Group.
Cryptocurrency prices slump as a broad selloff sparked by worries about contagion from China Evergrande Group sweeps through global markets https://t.co/kLlREHrmUh pic.twitter.com/ZLEgAJYdnu— Bloomberg Crypto (@crypto) September 20, 2021
El Salvador buys the Bitcoin dip
Still, the community keeps buying the dip. As covered by U.Today, El Salvador president Nayib Bukele tweeted that the government of the country had acquired another 150 Bitcoins, now holding a total of 700 BTC.
Over the weekend, the president boasted that over 1.1. million local residents had downloaded the locally produced Chivo BTC wallet. Each of them received $30 worth of BTC for taking that step.
Selling Hits Crypto Market Again as New COVID Variant Spooks Traders
Selling pressure once again hit the crypto market on Friday, after stock markets in Asia and US stock futures all pointed lower on fears over a new variant of the coronavirus that is spreading rapidly in South Africa.
(Updated at 12:12 UTC; updates in bold.)
At 10:28 UTC, bitcoin (BTC) was down by 6.5% over the past 24 hours, trading at a price of USD 54,735. At the same time, ethereum (ETH) was down by 6.4% to a price of USD 4,077.
By noon UTC time, the market had fallen further, with BTC now down 6.8% over the past 24 hours to USD 54,151, and ETH down 8.1% to USD 4,027. BTC was up slightly from its low for the day of USD 53,618, while ETH was still reaching new lows at the time of writing.
Both cryptoassets fell today after seeing gains yesterday, with the sentiment then appearing to be turning positive after two weeks of mostly lower prices for bitcoin.
Following today’s sell-off, however, bitcoin is now trading below its low from Tuesday this week of USD 55,300, which at the time marked the lowest price since October 13. With today’s crash down to the USD 54,000-level, sentiment is once again turning negative among traders.
And as usual when selling pressure hits the market, leveraged traders who have bet on the wrong outcome get liquidated.
Over the past 4 hours, the overall crypto derivatives market saw close to USD 440m of mostly long positions liquidated, with the majority, as usual, being on major crypto exchange Binance. For BTC alone, total crypto market liquidations stood at USD 116m, with USD 50m of that seen on Binance, data from Coinglass showed.
Despite this, many industry insiders remained optimistic about the prospects of the crypto market, with for instance Hunter Horsley, CEO of crypto asset manager Bitwise, telling Bloomberg today that the current move looks like it is driven by “flows and transitory sentiment.”
“When we look at the fundamental thesis and drivers of the space, they continue to look incredibly optimistic,” Horsley said.
However, the sell-off did appear to lead some members of the community to realize that the path to USD 100,000 will not be a straight line higher.
“The Plan B idea of USD 98K is gone,” the popular crypto trader Michaël van de Poppe said on Twitter today, referring to the widely criticized stock-to-flow (S2F) model by PlanB, which famously predicts a bitcoin price of at least USD 98,000 by the end of the year.
“The realization of a lengthening cycle is there. We’re still fine, even if we drop some more. Just a longer cycle for Bitcoin,” the crypto trader added.
Others, meanwhile, stressed that bitcoin is still a risk-on asset, and thus behaves more like the stock market than the traditional safe haven gold.
This was also pointed out by Nik Bhatia, author of bitcoin book Layered Money, who wrote on Twitter today that “Bitcoin investors are desperate for it to behave like a risk-off asset, but the simple fact is that it doesn’t yet.”
He added: “When will it? I have no idea. Price is truth.”
While there have been signs that #Bitcoin is starting to behave as a risk-off asset, and that's what we want it to be, we have to face reality and the possibility that $BTC continues to predominantely behave as a risk-on asset. pic.twitter.com/fsfkNWi9QH— Jan Wuestenfeld (@JanWues) November 26, 2021
14/ While your NFTs were pumping, this is already happening!
Instead of crypto moving as a monolithic asset class, with the entire asset class moving into winter and bull simultaneously, sophisticated capital and quantifiable traction has led to massive decorrelation.— Jason Choi (@mrjasonchoi) November 25, 2021
South Korean Draft Law Calls for Life Sentences for Crypto Market Manipulators
The South Korean government has unveiled a new draft crypto law that includes strict punishment for token market manipulation-related offenses – proposing massive fines and hefty jail sentences for offenders.
Per Maeil Kyungjae and the Hankyoreh, in cases where offenders make over USD 4.2m from their market manipulation efforts, courts would be allowed to dish out life sentences. The bill covers insider trading in the crypto markets, making use of as-yet “undisclosed information,” as well as illegal crypto transactions.
The bill is an indirect response to a number of high-profile instances of alleged and proven market manipulation controversies, with individuals and firms accused of artificially driving up trading volumes, releasing fake news stories about imminent token listings and more. Many South Korean exchanges have traditionally offered pairings in low-cap tokens that critics claims are ripe for market manipulation efforts.
The terms of the draft bill explain that even in cases where the manipulation brings in offenders less than USD 422,000 worth of “profits,” courts must hand out a minimum sentence of one year in prison.
Convicted offenders will also be forced to pay courts x3-x5 the money they earned in fines.
And it is not just conventional cryptoassets that will be covered by the law: it will also apply to decentralized finance (DeFi), stablecoins, in-game currencies and security tokens, the media outlets explained.
The bill is not yet finalized and will first be examined by relevant parliamentary committees before being put to a vote in the National Assembly.
Meanwhile, the nation’s top regulator, the Financial Services Commission (FSC), appears to be talking itself in circles on the issue of non-fungible tokens (NFTs) and whether they will be subject to taxation from January.
Traders will be obliged to pay 20% capital gains tax on annual profits of USD 2,100 or above as of next year – although the ruling party and both leading candidates for next year’s presidential elections have supported measures to delay the tax launch by a year.
The FSC has previously stated that NFTs are not subject to taxation because they “are not cryptoassets” – but Seoul Shinmun reported the FSC Vice Chairman Do Kyu-sang has in fact told the National Assembly’s Political Affairs Committee that “the government’s position is that NFTs can be taxed even under the current regulations.”
MPs have previously claimed it is unfair that traders buying and selling bitcoin (BTC) and other tokens will be taxed on their earners while NFT traders will escape taxation on their incomes.
The FSC did not rule out making further changes to legislation to help it enforce NFT taxation – although this might require National Assembly approval. Such approval may not be forthcoming in the lead-up to next year’s election, with politicians hopeful of currying favor among younger, crypto-keen voters.
Critics have hit out at the FSC. The country’s top crypto academic, Park Sung-joon, the head of the Blockchain Research Center at Dongguk University, was quoted by the Korea Times as stating:
“In [this] situation, where the financial authorities are contradicting each other, it is confusing for market players of virtual assets to know whether they must pay taxes or not.”
Crypto Market Attempts to Recover! Traders, Keep Eye On These Altcoins
The worldwide crypto market cap climbed by 1% to $2.61 trillion in the last day. Bitcoin is currently trading for around $60,000, down over 8% in the last week.
Ethereum has risen 1% to $4,239 in the last 24 hours. It has lost about 9% in the last seven days.
Nicholas Merten, a well-known crypto analyst, has his eye on three digital assets that he believes will thrive after the altcoin market outperforms Bitcoin.
Merten tells his YouTube subscribers in a new strategy session that with altcoins poised for a breakthrough, he is focusing on one sector that could be the most promising.
He says even as we’re still laying the groundwork for altcoins to have a huge breakout and continue to outperform Bitcoin for the remainder of the year. He’d want to jump forward and talk about a sector that has piqued his curiosity, i.e layer emerging layer 1’s.
Merten recommends layer 1 protocols as the “best bet” for investors in this market, citing three coins to keep an eye on.
e-Radix (EXRD), the first layer-1 created particularly for decentralized finance (DeFi), is showing outstanding momentum in its Bitcoin pair (EXRD/BTC), according to Merten.
He notes that it broke out of a descending wedge against Bitcoin and volume has exploded, the price has begun to break out, and the momentum is incredible. The token has made support on previous resistance every time it pulled back, he adds.
At the time of writing, EXRD is $0.459336, down by 0.2% in the last 24 hours. The resistance from here is at $0.527526 and the support lies at $0.452110.
Moving on to Energi (NRG), a fundamental blockchain with smart contract capacity, decentralized voting, and a self-funded treasury, the analyst believes the altcoin is about to break out after a long period of dormancy.
He believes that with a lot of the fundamentals coming out of Energi right now, it might lay the scenario for it to pop up higher and start climbing even higher, possibly kicking off its first major bull run in a long time.
NRG is trading for $3 as of writing, up by 61.9% in the last 24 hours. In the last 7 days, the coin has risen 75.3% according to Coingecko.
Merten concludes by mentioning MIOTA, an open-source distributed ledger aimed at the internet of things. MIOTA, like EXRD, has been in a long accumulation pattern, according to the analyst, and is due for a breakout.
At the time of writing, it is trading at $1.34 down by 3.2% in the last 24 hours.