As 2021 draws to a close, the global markets are taking note of massive financial institutions that are feeling the pressure of the record breaking inflation rates that topped out at 6.2% over the span of the last year.
With this inflation came two situations. This high inflation percentage was accredited with assisting Bitcoin reaching its $60,000 All Time High (ATH). Now it’s accredited to the situation we see developing in Chinas financial mega-corporation Evergrande
Evergrande is a massive institution that covers a significant portion of China’s economy. Real-estate is the main practice of the firm with a client base numbered in the hundreds of millions. The influence of this company on global markets is almost unparalleled, and we are currently seeing the effects it has on the crypto markets.
Evergrande recently defaulted on a debt deadline which was priced at $300 Billion. This missed deadline has effected global markets due to this money being owed to international investors partnered with the company.
With this failure to successfully pay off such a significant debt, fear has began to run rampant in the markets. Thus resulting in the market fluctuations we see currently.
With the majority of Evergrande’s value being found in assets, we are likely to see a significant shift in the firms dynamics in the coming weeks to accommodate this default in payment. With not many details explaining the possible monetary sanctions upon failure of payment, the total payout could be far greater than the original $300 Billion dollar invoice.
But for an organization with an asset pool valued at over $2.3 Trillion USD, this is most likely not a situation that will have long term effects on the market.
References:
https://cointelegraph.com/news/bitcoin-dips-below-50k-as-evergrande-defaults-on-us-dollar-debt/amp
https://www.nytimes.com/2021/12/09/business/china-evergrande-default.html
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