The digital currency industry saw a bearish decline for most of Monday, the first trading day of the week. The slump was fueled in particular by the financial crisis affecting China Evergrande, the Asian giant’s largest real estate developer.
The crux of the matter and the answer from Crypto
China Evergrande is facing a major liquidity crisis so severe that the Hong Kong stock market collapsed with Evergrandeh. The Hang Seng Index fell as much as 3.3% on Monday. While the crisis has struggled with roughly 2 trillion Chinese yuan (about $ 300 billion) in debt, it is currently forecast to have an impact on the world market. If not properly managed, China Evergrande could reprint history like the 2008 mortgage crisis.
Stimulated by the financial crisis, Bitcoin (BTC) fell to its lowest price of $ 42,669.05 in the past 24 hours, causing a sell-off in the broad market. Global crypto market cap has fallen below the $ 2 trillion benchmark due to the drop in prices.
While many financial firms are likely to be caught in the crosshairs of China Evergrande’s liquidity crisis, some market watchers are concerned about how resilient the digital currency ecosystem will be to ongoing sell-offs.
Positive for Bitcoin, cryptocurrencies
The advent of Bitcoin is said to serve as a reliable digital currency in cases where traditional options fail. Over time, Bitcoin’s use cases have evolved to include its function as a hedge against inflation. At times like these, when the global financial environment is under fundamental pressure, it is best to play a role in that regard.
Along with other cryptocurrencies, the chances of playing the inflation hedge role are further forecasted with the reaction or recovery at this point in time compared to more traditional assets. All in all, if the issues are found to persist uncontrollably, investor sentiment could be positive for Bitcoin and Altcoins.
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