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 <p class="is-style-lead">China’s Evergrande’s bankruptcy filing reverberates in the crypto markets, triggering significant drops in major digital assets and casting a shadow over Tether’s financial backing.</p> 
 <p>Once the leading property developer in China, Evergrande has recently transformed into a prominent representation of China’s property crisis.&nbsp;</p> 
 <p>On Aug. 17, Evergrande sought refuge from debtors by filing for Chapter 15 protection under the US bankruptcy code. This provision assists non-US companies in shielding themselves during restructuring, keeping creditors at bay.&nbsp;</p> 
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    <p lang="en" dir="ltr"> BREAKING <br><br>CHINA’S SECOND LARGEST PROPERTY DEVELOPER EVERGRANDE HAS JUST FILED FOR BANKRUPTCY pic.twitter.com/ckgqu6zaDY</p>— GURGAVIN (@gurgavin) August 17, 2023 
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 <p>Evergrande’s affiliate, Tianji Holdings, followed suit in Manhattan bankruptcy court. This development underscores the mounting anxiety that China’s property sector may bleed into other areas of the economy, especially as growth falters.</p> 
 <p>Evergrande’s liabilities, an astronomical sum of $330 billion, and a late 2021 default have catalyzed a chain reaction.&nbsp;</p> 
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   <blockquote class="twitter-tweet" data-width="550" data-dnt="true"> 
    <p lang="en" dir="ltr">#Evergrande will not be able to pay their debts without bailout right now they are juts kicking the can down the road. $330 billion in overall debt. $19 billion dollars of high yield bonds have been sold to overseas investors such as BlackRock.</p>— ALLINCRYPTO (@RealAllinCrypto) November 11, 2021 
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 <p>Companies responsible for 40% of Chinese home sales have defaulted since the debt crisis emerged in mid-2021. The situation has left a grim landscape filled with thousands of unfinished homes and rattled investors.</p> 
 <p>Evergrande is not just folding its cards. Restructuring talks are underway in Hong Kong, the Cayman Islands, and the British Virgin Islands. Creditors may soon vote on a restructuring plan, with potential approval by Hong Kong and British Virgin Islands courts in early September.</p> 
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 </div> 
 <h2 class="wp-block-heading" id="crypto-market-s-reaction">Crypto market’s reaction</h2> 
 <p>News of Evergrande’s bankruptcy filing sent shockwaves through the crypto <a rel="noopener noreferrer nofollow" title="market" href="https://thebittimes.com/tag/market.html">market</a>. Bitcoin (BTC), leading the charge, crashed by 7% in the last 24-hours minutes and even dipped below $26,000, trading at $26,500 as of August 18.&nbsp;</p> 
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  <img decoding="async" src="https://lh4.googleusercontent.com/hno-oE1v1fTn-NUVNV546rXHuc1362hj5lT7Ep05f4Lx673xilBedxB3dVwkqDmgWb0GJKCzHA3iypCK5DedAHGXqno2CXNuhxfuiwSCYZ9Nwwl9zklcJwSuf7f1YvtR8j5wo4eu0IbewVMvGc7A-es" alt="Evergrande сrypto сrash: Chinese giant's impact on digital markets - 1"> 
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    BTC 24-hour price chart | Source: CoinMarketCap 
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 <p>Some also blame Bitcoin’s sudden drop on a viral post, alleging that Elon Musk’s SpaceX sold its entire $373 million Bitcoin stash.</p> 
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   <blockquote class="twitter-tweet" data-width="550" data-dnt="true"> 
    <p lang="en" dir="ltr">At a Bitcoin conference in 2021, Elon Musk announced that SpaceX owns #Bitcoin.<br><br>“I have Bitcoin, Tesla owns Bitcoin, SpaceX owns Bitcoin.” – Elon Musk <br><br>Today it was uncovered, SpaceX sold all its $373M #bitcoin, according to WSJ pic.twitter.com/Uwl4GyV6Sx</p>— Altcoin Daily (@AltcoinDailyio) August 17, 2023 
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 <p>Meanwhile, Ethereum (ETH) followed suit, declining by nearly 6% and trading at $1,695 as of this writing.</p> 
 <p>The crash wasn’t confined to Bitcoin and Ethereum alone. Ripple (XRP) declined by 14%, Litecoin (LTC) plummeted by 13%, and Shiba Inu (SHIB) declined by 8%, over a single day.&nbsp;</p> 
 <p>Moreover, Bitcoin’s recent surge due to institutional interest seems to have been halted, with SEC’s slow approach to approve a Bitcoin ETF dampening enthusiasm.</p> 
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 </div> 
 <h2 class="wp-block-heading" id="tether-s-exposure-to-chinese-debt">Tether’s exposure to Chinese debt</h2> 
 <p>Tether (USDT), one of the most prominent stablecoins in the cryptocurrency <a rel="noopener noreferrer nofollow" title="market" href="https://thebittimes.com/tag/market.html">market</a>, has been caught in the shadow of the Evergrande crisis. The complexity of Tether’s asset backing and the potential exposure to the Chinese financial system make it a focal point of interest and concern.</p> 
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    <p lang="en" dir="ltr">Just like my map showed from 2021. I’ll share it again for those who didn’t see it. <br><br>Evergrande &gt; Tether <br><br>China. https://t.co/X4iwxb9Zdk pic.twitter.com/EvuM3HDX53</p>— XX_1133_1221_11 (@XX_1133_1221_11) August 17, 2023 
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 <p>Tether’s backing traditionally consisted of reserves in fiat currencies like the US Dollar. However, the composition shifted over time to include other assets like commercial paper.&nbsp;</p> 
 <p>In mid-2021, a report highlighted that nearly 50% of Tether’s backing came from commercial paper, short-term unsecured promissory notes issued by corporations.</p> 
 <p>While Tether quickly assured the <a rel="noopener noreferrer nofollow" title="market" href="https://thebittimes.com/tag/market.html">market</a> that it had no direct exposure to Evergrande’s debt, the precise details of the commercial paper in Tether’s reserves remain undisclosed.&nbsp;</p> 
 <p>Concerns arise because commercial paper issued by Chinese corporations could still form part of Tether’s reserves, indirectly linking Tether to China’s broader economic situation.</p> 
 <p>Evergrande’s default and the broader uncertainty in the Chinese real estate and corporate sectors could impact the value and stability of commercial paper from other Chinese entities. If Tether holds a significant portion of such paper, it could lead to questions about the stablecoin’s valuation and stability.</p> 
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 </div> 
 <h2 class="wp-block-heading" id="what-to-expect-next">What to expect next?</h2> 
 <p>Evergrande’s restructuring and the knock-on effects on various sectors call for a cautious approach. Investors, regulators, and market participants must navigate the uncertainty with diligence, foresight, and readiness for abrupt changes.</p> 
 <p>The shock from Evergrande’s situation is a vivid reminder of the fragility and interconnectedness of global financial <a rel="noopener noreferrer nofollow" title="markets" href="https://thebittimes.com/tag/markets.html">markets</a>. The crypto world should brace for further volatility, as traditional financial woes can cascade into <a rel="noopener noreferrer nofollow" title="digital" href="https://thebittimes.com/tag/digital.html">digital</a> asset price swings.</p> 
 <p>Expect heightened scrutiny on Tether and similar stablecoins as analysts and regulators dissect their exposure to global market events and adherence to financial standards. The Evergrande saga could be a catalyst for more rigid oversight.</p> 
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Evergrande сrypto сrash: Chinese giant’s impact on digital markets

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