Evergrand crisis affects Bitcoin and falls more than 10% of its value
The world shudders when learning what happened with the huge real estate company Evergrande. By causing a crash in most markets, Bitcoin and other cryptomones have been affected directly.
This not only affected Bitcoin, which collapsed 10%, also affected the digital currency market in general, falling more than 8%. This situation began last Sunday, when it was discovered that the Evergrande company was paying its investors with real estate.
The following Monday the Chinese authorities announced that the nicknamed “Most indebted real estate in the world”, could not pay for its obligations. But what does this have to do with Bitcoin and the rest of the digital coins?
To answer this question, we must learn a little more about Evergrande.
What is Evergrande?
This company is recognized as one of the largest real estate developers in China, being part of Global 500. What makes it one of the world's largest income companies.
It has the capacity to employ at least 200,000 people, which also helps to maintain almost 4 million jobs indirectly. No doubt it is a base pillar for the economy of this country, and has more than a thousand projects in almost 300 cities in China.
In addition to this, the company invests in electric vehicles, thematic packages, sports, has food, beverage, water and so on business. He even has a soccer team that begins to set up as the world's largest soccer school.
Not only that, Evergrande plans to build an artificial island that includes museums, shopping centers, theme parks and more. Its complete opening stipulates at the end of 2021.
How did you fall in this situation?
As we already mentioned, Evergrande has various projects that are calculated in billions of dollars. Which has been obtaining through loans, which were accumulating as debts.
Because of this, it was gained the fame of being known as the most indebted real estate in the world, with more than $300,000 million in liabilities. Evergrande has been giving a few weeks warning that its cash flow was having problems, so I could fail to comply with payments.
Warning that became a reality last Tuesday when it was revealed that it was having problems with the sale of its assets. Then it was discovered that the same Monday his actions from him fell 85%, reaching his lowest level since May 2010.
His same actions pushed her to acquire debts that may not be able to pay, although not everything is Evergrande's fault. Because it is one more case of China's economy related to debts.
It is something that has already happened before, as an example of this we have what happened last year. A lot of state companies failed to comply with payments from their loans, generating all kinds of controversies against China's economy.
What are your solutions?
Evergrande's first movement to face this problem was to hire several financial advisors to evaluate their situation. Although these advisors are experts, the company warns that its solutions do not guarantee a solution.
Your actions so far have been the search for potential buyers for your business in real estate services and electric cars. Although the search for it has been in vain until now, and maybe I can not consummate this sale.
In addition to this, in a desperate attempt to pay their debts, the company has tried to sell its offices tower in Hong Kong. Which was acquired in 2015 by an approximate amount of $1,600 million, although it has not been completed either.
Why does this affect Bitcoin?
Even though Bitcoin has nothing to do with the real estate problems of this company based in China, it is still being affected. This may be due to the alarmed reaction that investors have had before the news of Evergrande.
Because if this company falls, will cause a financial hole that could affect many worldwide investors. Workers, businessmen, retail investors and wholesalers are at expectation and reacted selling a large part of their actions.
Due to its hurried sales, they resorted to more direct payment methods such as Bitcoin, and they sold them at bearish prices. Causing a collapse not only in Bitcoin, also in many cryptocurrencies and digital coins in general.
It is aspired that this event is merely momentary and that the merchants of these cryptomones help recover their balance. Although equal they should be kept attentive before any evergreen action, since there is a great chance that it is ends up victorious of this problem.
Similarly, it is not only this company that is causing these problems, all China is an economical time bomb. Due to all the problems caused by following an economy based on debts cumulative.
What are the expectations in the future?
It is expected that the measures that I take Evergrande will end helping it out of this economic trouble. Although otherwise, is believed that China's government will have to intervene to reduce the consequences that this default could cause.
At a minimum, the Government will try to maintain calm between people and mainly among investors. This Wednesday a spokesman for the National Statistics Office in China, admitted that some real estate companies have difficulties.
He also clarified that this market has remained perfectly stable in the last year and that should not be feared. Although he specified that it is necessary to remain attentive to the impact of events that occurred in the real estate industry.
In addition to these statements, capital of Capital Economics, declared that the immediate intervention of the Central Bank of the country is predicted. It would be intervening with a liquidity support in case the fears on failure of Evergrande increase.
Statistics do not stop being encouraging, although the company remains negative. This may be due to the fact that the media continue to say that the financial problems of Evergrande are a huge black hole and no sum of money could help them.
