The crypto market is still having a hard time. The Bitcoin price even briefly dropped below the psychological $40,000 limit yesterday, around midnight.
Bitcoin price briefly drops below $40K
Bitcoin price briefly fell below the crucial USD 40,000 support level last night. The price reached a low of about $39,657 but then suddenly started to rise again. Over the course of the night and morning, the recovery has continued, bringing the BTC price back to around $42,270. The question traders are now asking themselves is whether we are past the bottom or whether we are going to make another trip down.
It would be a good sign if Bitcoin manages to stay above USD 42,000 today. If successful, the next interesting point is around $44,000. On the other hand, it would be a sign of weakness if BTC fails to close above the USD 42k level today. There is a good chance that we will test the USD 40,000 support again.
What caused the crypto crash?
The crypto crash is partly related to concerns about a global stock crash from a massive Chinese company called Evergrande. The Shenzhen-based real estate giant has huge debts ($305 billion).
Some fear that China’s second-largest property developer will be unable to repay its debts. That could be a major blow to the Chinese economy, but also to the global stock market.
Regulators have warned that the country’s financial system could be in trouble if Evergrande doesn’t find a solution. The entire stock market could suffer from this. This is because there are many international asset managers and banks that have invested in Evergrande.
The S&P 500, the Nasdaq, the AEX and basically all global stock markets were therefore hit yesterday because of the uncertainty. It is not surprising that the crypto market had to endure much harder. Investors tend to sell risky assets when there is global economic uncertainty.