21.09.202113:56 Forex Analysis & Reviews: Bitcoin drops to $40k amid possible bankruptcy of Evergrande

One may wonder how the news about the possible bankruptcy of Evergrande may affect bitcoin. Yet, the connection is quite clear. As of September 21, Evergrande shares have collapsed by 81% since the beginning of 2021 as the liquidity crisis deepens and inflation rises higher. According to the Chinese banks, Evergrande will not be able to pay its debt obligations due on September 20. When the total debt of Evergrande reached $300 billion, rumors about the possible bankruptcy of the company appeared. In any case, the financial problems of one of the world's largest developers have already affected the global financial market, including the cryptocurrency one.

On September 20, BTC continued to decline despite a slight rebound. After the news, the BTC price reached the $40,000 mark on the largest crypto exchanges. Shortly after, it bounced to the nearest milestone of $43,000. As of 14:00, it is trading at $43,100 with daily trading volumes of $46.9 billion. Bulls and bears are pulling the rope. However, bears are likely to take the upper hand. The bearish bias has intensified not only due to the fluctuations in markets but because of other factors.

Now, the crypto market is highly volatile. The turmoil in the financial sector only adds fuel to the fire. The crypto fear and greed index, which is used by investors to gauge the market, sank to 27. It indicates cautious trading in the crypto market, in particular with bitcoin. Despite yesterday's collapse, the losses of traders were not a big as after the collapse of the crypto market on September 13. In the short term, bitcoin will try to stabilize and consolidate above the support level of $44,000. On the horizontal charts, indicators signal a gradual completion of a downward movement. On the 4H chart, the price is likely to enter the sideways channel. The MACD indicator left the red zone and began moving along the horizontal line. The stochastic and RSI reached the 40 mark and also signal growth.

The daily chart also signals a reversal and the following upward movement. Stochastic performed a reversal and may soon form a bullish intersection, which is an important signal for a possible rise above $44,000. The MACD indicator moves along the zero level and is in the red zone. Yet, it may also form a bullish intersection. The RSI indicator climbed to the 40 mark. However, a bit later, it again sank below it. It may indicate an upcoming reduction in short positions. If BTC manages to climb above $44,000, then there are chances of an increase above $45,000. At this level, the digital asset may consolidate. However, in the case of a bearish breakout of $43,000, it may drop below the key support level of $42,800 and retest the level of $40,000. The second scenario implies a sharp trend reversal.

The situation is also aggravated by on-chain activity. It does not recover even despite the BTC fall. The divergence on the charts in terms of the number of unique addresses in the BTC network continues to gain momentum despite the price decline. However, the statistics on medium-and long-term holders of bitcoin are rather interesting. It remains bullish. As of September 21, the BTC supply is at an all-time low. It seems that BTC holders have not transferred or performed operations with coins over the past three months, which confirms the assumption of an accumulation period and a long-term uptrend.

This is why the news about the possible bankruptcy of a large developer with a $300 billion debt is so vital. The company will have to resort to debt restructuring or its monetization (issuance of paper money). The decline of bitcoin will become a decisive factor in the investment flows into it. It will significantly strengthen its position. In the near future, BTC will continue to trade within a narrow range, trying to break above of $42,800. This is why traders refrain from opening long positions. At the same time, holders may increase their long positions amid the inflationary tension in the global economy.