Cryptos

Is Evergrande failing? This is the reason China’s war against Bitcoin.

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China’s largest real estate developer, Evergrande, appears to be on the verge of collapse. They owe $300 billion. Is bankruptcy possible? However, there is a better question. Is Evergrande the only company with this level of debt in the sector? Is Evergrande a symptom or a sign of a larger disease? What does Bitcoin have to offer? The following article will present a valid case. Is this “The Lehman moment in ChinaAs the pseudonymous Bitcoin analyst suggests?

Related reading | New to Bitcoin? Learn how to trade crypto with the NewsBTC trading course

What we know for sure is that “The main Chinese banks have been informed by the housing authority that the Evergrande group will not be able to pay the interest on the loan due on September 20.Plan B’s commentary sets the tone, and the video shows the intensity of the situation:

Check yesterday’s date. Lehman Brothers filed for bankruptcy on September 15, 2008. Let’s do Investopedia quote for a quick recap.

“At the time of its collapse, Lehman was the fourth largest investment bank in the United States with 25,000 employees worldwide. His assets were $ 639 billion and his liabilities were $ 613 billion. The bank has been a symbol of the excesses that led to the 2007-08 financial crisis. This was caused by the subprime meltdown, which swept through financial markets and resulted in $ 10,000 billion in economic losses.

Is China currently in a similar situation?

How did China Evergrande get here?

A few days ago, on September 13, the South China Morning Post seemed cautiously optimistic about the situation. They explained the root of the problem:

“Reports of missed payments to entrepreneurs, attempts to reschedule payments on wealth management products and failed asset sales have prompted Chinese regulators and the central bank to intervene to avoid a shock to the market. financial system. “

At the time, the big news was that they were hiring “Houlihan Lokey and Hong Kong-based investment bank Admiralty Harbor Capital to assess its capital structure, assess liquidity, and explore ways to alleviate its current liquidity crisis.And you know what that meant:

“By hiring such financial advisers, Evergrande has come to a serious stage of listing what he owns, what he owes and the best plans” to get by, said Lung Siu-fung, analyst at CCB International.

The signs were there.

Evergrande price graph on HKEX. Source: 3333 on TradingView.com.| Source: 3333 on TradingView.com

Where are we now? Is China really in trouble?

China Evergrande seems to have been caught in a loop. The company would presell apartments and then use the money to finance other projects. In which case it would also presell the apartments again. Evergrande bonds have been canceled and may never become active again. They could be worthless. The stock is at its lowest point, losing nearly 80% of its value in the past year.

Complete the story, CNBC informs:

“The company has warned investors twice in as many weeks as it could default. Evergrande warned investors Tuesday that it was at high risk of cross default. This could mean that similar risks could be spread to other industries.

Evergrande said Tuesday that its real estate sales will continue to deteriorate significantly this month, adding to its serious cash flow problems. “

Evergrande’s problems could be a sign of a larger disease. That’s the million-dollar question. Is the Chinese real-estate sector in serious trouble? For this answer we have to go to The ZeroHedge Report:

Country Garden, the country’s largest developer in terms of sales, has plunged 16% in the past two days, while Gemdale has fallen 12% as the gauge of real estate stocks in Shanghai has fallen nearly 5%. The period saw a drop of % and valuations that were significantly lower than the book value. Guangzhou R&F Properties saw a 10.8% drop, its lowest point since December 2008. Greentown China was down -9.1%. At this point, it is safe to call it a crisis. “

What is the relationship between Evergrande Bitcoin and Bitcoin?

China’s Bitcoin policy makes no sense. It is difficult to comprehend how it is possible to regulate yourself out of the top position in one of the most important industries of our times. Something else must be happening. NewsBTC has been following the case. we explored CBDC Digital Yuan angle. We reviewed the sales announcements small hydropower plants. We discovered China’s dominance over Bitcoin’s hashrate decreased before the ban. And we have detailed the so-called new “Chinese model”.

Underneath Plan B’s original tweet, two comments grab attention. Investor and podcaster Preston Pysh believes the situation is “The guaranteed result of fractional reserve banking: Depreciation of promises. It’s only a matter of when and how much.»And the person behind Bitcoin Documentation Becomes A Conspiracy and say, “They knew it was going to happen. Perhaps this is why they “banned” bitcoin.”This, as you can imagine, opens a huge box of worms.

Similar reading: Bitcoin’s hashrate recovered 68% and counting since China’s mining ban. Plan B replied full of confidence: “Yes, and they closed off the exits, often they still do.| Since China’s mining ban, Bitcoin’s hashrate has recovered 68% and counts

Full of confidence, Plan B replies: “Yes, and they closed the exits, typically they still do.“Bad for the Chinese people, but generally bullish for Bitcoin. The government saw this coming from far. They knew the crisis would hit the country multiple times, and they banned Bitcoin mining in an attempt to scare people away from the most expensive asset. Bitcoin is the best hedge against economic collapse. The Chinese government will attempt to get out of this. And he will use this crisis to reveal their CBDC Digital Yuan.

Does this theory seem consistent to your mind? Is there more to this story?

Featured Image by Li Yang on Unsplash - Charts by TradingView




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