The world financial market is on the alert for the crisis of the Evergrande company, the second Chinese real estate company that has confirmed the great financial difficulties due to the stability in the sector with the advent of the pandemic and is estimated to have a debt of at least 300 billion dollars, but the debt is probably much higher. The story is very reminiscent of the Lehman Brothers crisis and there are fears of the negative effects it could have on the Chinese economy.
The Chinese crisis has hit the financial markets around the world with a negative effect, all the indices opened today with a sharp fall. The same fate also befell the crypto market, on average with a loss of about 10%. This time there was no negative news regarding the crypto world but it was conditioned by the possible Chinese economic crisis that frightened the markets and further strengthened the dollar. In reality, I expect the crypto market to benefit from this situation in the coming days as it is likely that the Chinese government will probably intervene with the printing of money, in disproportionate quantities that will inevitably affect the devaluation of the local currency. Investing in crypto today can guarantee a capital value greater than the value of the current currency.
The Chinese government has recently decided not to intervene in similar situations, as the government cannot economically save all companies in difficulty, thus avoiding drawing on public money to avoid the bankruptcy of private companies. However, it is likely that this attitude will not be adopted towards Evergrande, as it would cause major repercussions on the Chinese economy and on the job with thousands of layoffs ready to go, not to mention the damage to the induced which would be even greater.
A failure of the people could really cause a sinking of the Chinese economy and reverse the growth curve that has always marked positive results. Furthermore, the shares of the company are literally collapsing and dangerously approaching the value 0. This would also mean the total loss of the capital of small and medium investors who are already in protest, however, having in the last two months about 90% of their value and now being almost torn paper. The situation is really very serious but crises like this show how cryptocurrencies can also be a more valid financial alternative than bonds or shares. All financial products have a risk and if cryptocurrencies were previously seen as scum, now things are changing. Crypto is a financial and technological opportunity, they are not risk proof but are currently proving to be more reliable than companies like Evergrande.
Of course, the utmost prudence and above all information is always required. As a dear friend of mine said, information makes man free!