Bitcoin's 2021 bull run came to an abrupt end in June when Chinese regulators banned cryptocurrency miners. Bitcoin, Ether , and nearly all other cryptocurrencies saw a sharp drop on Monday night, which again appears to be linked to China's activity, although for a different reason this time.
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Bitcoin’s price has fallen more than 11% in the past 24 hours. The cryptocurrency came close to falling below $40,000 when it fell to $40,500 at 5:30 p.m. PT. It would be the first time Bitcoin’s price has fallen below $40,000 since early August. Bitcoin’s all-time high was $64,863, which was reached on April 14.
The second-largest cryptocurrency, Ether, and the one most used in cryptocurrency trading, is down 12% in the past 24 hours. It is just above $2,900, the first time it has fallen below $3,000 since August 8. Dogecoin is near 20 cents, down from a high of 70 cents in May.
Being a decentralized system, it is often difficult to say exactly what causes cryptocurrency markets to collapse. However, Monday’s drop is believed to be linked to China’s real estate market and in particular the Chinese company Evergrande Group. Evergrande is the most indebted real estate company in the world, with debts of more than $300 billion, and markets around the world have fallen on fears that China will allow Evergrande to default on its debts.
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The Dow Jones fell 1.78%, while Hong Kong's Hang Seng Index fell 3.38%.
If Evergrande fails to cope, it could have a dramatic impact on China’s entire economy, which could in turn affect countries around the world. Evergrande’s collapse has been likened to the Lehman Brothers bankruptcy that preceded the Global Financial Crisis, although its impact is unlikely to be as severe. Evergrande shares have fallen 85% in the past year, and its offices across China have been the target of protests from employees, builders and homeowners.
It was certainly a tumultuous month for Bitcoin, which surged in late August and early September in anticipation of the cryptocurrency becoming legal tender in El Salvador for the first time. El Salvador’s Bitcoin rollout, however, had technical issues that seemingly spooked big investors and sparked a sell-off.
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Chinese authorities sent cryptocurrency markets plummeting in June after officials made it clear that a 2013 ban on mining and other cryptocurrency-related services would be enforced more strictly. It's part of a larger crackdown on tech companies in China at the moment, which has seen authorities target companies like Ant Group, Didi and ByteDance.
