Evergrande & Tether USDT – BLACK SWAN EVENT – Cryptocurrency News 2021 – Financial News 2021
Evergrande and Crypto: Just How Intertwined Are They?
The global financial system is truly on the verge of a breakdown. All major global economies the eurozone the US Australia China. Every government and there central Banks there Fiat based monetary system are reaching their mathematical implosion. Math never lies, once a country or any borrower for that matter is. No longer able to pay back at least the interest on your outstanding loan, let alone not even being able to pay back the principal amount. This ladies and gentlemen is when you know you have hit the end of the road.
It isn’t over until the fat lady sings and let me tell you something lady is getting ready. It’s time for you to take off your rose coloured glasses and smell the coffee because it’s time for number 1 to teach you yet another lesson.
On the Macro Level
Evergrande, China’s second-largest real estate developer, has amassed a debt of $300 billion, or the equivalent of 2% of China’s GDP, which according to reports, it is unable to pay. The premise of another Lehman Brothers catalyzing event for the global economy has taken shape after the Chinese government informed banks Evergrande would not meet interest payments due September 20th.
Investors foresee a gloomy end to the Evergrande story. If the company goes under, it will be one of the biggest corporate collapses of our time. According to CNN, Evergrande stock has dropped by 85% in 2021, and the company is hoping for a Beijing bailout. But what does that have to do with the state of the crypto market?
Crypto Is on the Edge
Tether, the largest stablecoin by market capitalization, is a Hong Kong-based cryptocurrency. Operating in the same financial sandbox as Evergrande makes the company susceptible to becoming collateral in the economic war. Tether entered the spotlight after concerns surfaced that the company owns Chinese and even Evergrande commercial papers (CP) or certificates of deposits (CD) to back up their USDT.
According to Reuters, Tether announced it does not hold any commercial papers; however, David Morris notes that Tether might still have exposure to Chinese obligations or other forms of investments tied to the Chinese government. What’s more, Tether said that they cannot disclose counterparty information because they “are in a commercially sensitive business.”
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