Crypto Corner - Summary of the Week 20/09/2021


Written by: Yves, Head of Trading at Wirex

The cryptocurrency markets dropped severely this week, extending the previous week’s losses. As of this morning, the Bitcoin price (BTC/USD) weekly performance is down nearly 11%, after suffering a 16% correction on Monday-Tuesday. Adverse macroeconomic conditions over the woes of the Chinese real estate company Evergreen have been weighing on most traditional markets. And the cryptocurrency sector is not immune. The S&P 500 index lost nearly 2% from Friday to Tuesday before bouncing back, and the Hang Seng Index (HSI) is still down by nearly 8% this week. The Ether price (-17%), Ripple XRP (-14%), Polkadot (-15%), DOGE (-16%), and Uniswap UNI (-23%), among other major cryptocurrencies and tokens, are all showing double digit losses this week.

The looming default by the Chinese real estate developer Evergrande is sending shockwaves throughout traditional markets. The former top 500 world company didn’t pay on Monday some of the interest due on its loans, but resolved the payment of some of its onshore debt on Wednesday, triggering the temporary rebound. With more than $300 billion dollars of liabilities, and a hundred billion in debt, Evergrand owes lenders, but also suppliers and home buyers as its liquidity is severely drying out. It is trying to restructure its debt, to sell its assets, including its interests in subsidiaries to potential investors to raise the required liquidity. The Chinese government will likely not step in as a lender of last resort, sparking fears that the company’s collapse could turn into another Lehman Brothers scenario. As far as cryptocurrencies are concerned, the Chinese Central Bank (PBOC) intensified again its policy on cryptocurrencies, stating this morning that all cryptocurrency-related transactions are illegal.

After the expiration of the September derivatives and with the PBOC announcement, the market resumed its correction. The next major support is now near the $35k levels, which could be reached with a flash crash if the Evergrande issue deteriorates. The December future implied annualized rate is already below 7% as leverage is decreasing. However, the total notional of future contracts liquidations is nowhere near the levels seen on September 6th. It would indicate that traders are de-leveraging their positions slowly. The trading volume peaks have only been observed during market corrections this month, which indicates that the market could be turning bearish.

The healthy Bitcoin hashrate or the increased adoption of the major cryptocurrencies failed to balance the pressure of global institutional markets. Comparing the Binance and CME (Chicago Mercantile Exchange) December futures, it appears that Monday’s correction, associated with the Evergrande default event, was mostly fuelled by institutions.

On the adoption front, Twitter rolled out its application Tips yesterday. The application now lets its users tip their favorite accounts with Bitcoin. The social network also announced that it is planning to integrate NFT authentication, to let creators connect and display their digital work on Twitter. Despite the short-term turmoil, turning cryptocurrencies slowly into utility tokens will help drive the volatility down in the long run.

data taken at 10:01 am 24/09/2021

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The above is an opinion piece and therefore should not be taken as financial advice. Please do your own research thoroughly when looking at Cryptocurrency.
5 Likes

Im still hodling :heart:

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I also keep calm and still hoDl :sunglasses:

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indeed :heart:

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As always China bans crypto to create panic sell

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12 yrs of FUD dont mind :smiley:

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Hodl hodl hodl

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It’s a distraction to keep the sheeple out