Bitcoin tumbled as concern over China and caution ahead of this week’s Federal Reserve meeting weighed on US stock index futures, analystsdollars said. According to some, speculation that the US government may suppress stablecoins as a risk to the financial system may be adding to the uncertainty in the crypto market. In addition, attention is drawn to the Evergrande problem in China. In addition, BTC critic Steve Hanke came up with his new criticism.
Bitcoin and major altcoins fall hard
While the largest cryptocurrencies by market value such as Bitcoin, Dogecoin, Cardano, Ethereum experienced a decrease of almost 10 percent; Futures tied to the S&P 500, Wall Street’s main stock index and the global benchmark for risk assets, are trading 1% lower, alongside losses of similar size in European stock indices and shares in Hong Kong and Japan.
Pankaj Balani, CEO of Delta Exchange, said, “Investors are looking to take risks off the table for fear that a crisis in China Evergrande Group could become a systemic problem for global markets. Markets will also look at the Fed’s comments this week to ensure there is no change in liquidity from the central bank.”
Evergrande crisis is thought to worry markets
Evergrande fell more than 10 percent in Hong Kong earlier today, pushing the year-to-date decline to 85 percent on concerns that the cash-strapped real estate giant could default on its $83.5 million interest payment due this Thursday. Chinese officials have already told lenders that the company is likely to miss payments.
While some observers have called the Evergrande crisis China’s “Lehman moment”, Messari’s Mira Christanto says such fears are exaggerated. The two-day Fed meeting, which ends Wednesday, will be watched closely by investors to clarify the central bank’s plans to reduce or increase its liquidity-boosting stimulus program.
Will regulatory action be taken against stablecoins?
Alongside macro factors, it is thought that the upcoming regulatory action on stablecoins may have increased the selling pressure around Bitcoin. Cryptocoin. com
As we reported , an article published by The New York Times on Sunday said that US regulators are concerned that stablecoins can be a source of volatility and may bring dollar-stabilized cryptocurrencies under regulatory control, declaring them a risk to the financial system.
A recent Bloomberg report said officials are considering launching a formal review by the Financial Stability Oversight Council into whether stablecoins pose a threat. Combined with these issues, with quarterly Bitcoin options expiring this Friday, the coin is likely to remain volatile this week. Balani said the underlying trend will remain bullish while Bitcoin stays above $40,000.
Bitcoin criticism from Steve Hanke
Famous st Steve Hanke, who has criticized El Salvador for adopting the Bitcoin law in recent weeks, wrote on Twitter:
Do not buy the snake oil Bitcoin sold by crypto bulls. Its extreme volatility, proneness to fraud and uncertainty are the reasons why BTC was never suitable as a real currency. Bitcoin is a highly speculative asset with an underlying value of ZERO.
Historical data shows that September dips pave the way for larger bull runs, especially those seen after a halving year. Bitcoin held its third halving in May last year. The first and second halvings took place in 2012 and 2016.