Conflicting news about whether Chinese property giant Evergrande had defaulted on its overdue loan payments emerged just before Bitcoin’s (BTC) recent price crash.Evergrande Group is China’s second-largest property developer and is in debt for roughly $300 billion. There are fears that its collapse could spark a wider financial crisis.Two minutes after Evergrande’s payment was due, the Deutsche Markt Screening Agentur issued an announcement on Wednesday at 4 pm UTC, stating that it was preparing bankruptcy proceedings against Evergrande. Two hours later, at about 6 pm UTC, Bitcoin began it’s hours-long pullback to $62,800. Media outlet Morning Brew reported about 45 minutes later that Evergrande had missed a payment on its outstanding debt, which was due on Wednesday at 4 pm UTC, and defaulted. Another 45 minutes passed before Bloomberg issued a story saying that it hadn’t.Prices stabilized around $64,500 several hours after the initial drop. This was around the same time Bloomberg reporter Allison McNeely tweeted, “Contrary to what you may have heard ~on the internet~ Evergrande did not default today.” William Fong, senior trader at Australian crypto-asset investment platform Zerocap, told Cointelegraph:“Bottom-line, $148 million is nothing compared to the $300-billion outstanding debt of Evergrande, but it does create a concern for the $100-billion outstanding ‘keep-well’ structured offshore bonds by Chinese SoEs [state-owned enterprises] and corporates,” he stated.Fong believes that a bailout for Evergrande will not come any time soon because “Chinese regulators were the initiators of a cap aimed at over-expansion in developer’s leverage,” adding:Some believe Bitcoin’s price could also be at risk from a stock market meltdown and due to fears that nearly half of Tether’s reserves are made up of commercial paper, amounting to nearly $30 billion. This is enough for the Financial Times to place Tether among “global giants” in that category. Related: Record-high inflation prompts investors to take a closer look at BitcoinHowever, Tether has denied that it holds any commercial paper from Evergrande, though it may be exposed to Chinese companies. Commercial paper is a corporate debt note with a short expiration date of usually under a year.
5 October 2021