The Chinese property developer will soon be a “non-event,” one analyst says, with markets already shrugging off the story.
Bitcoin (BTC) bounced from a second $40,000 retest on Sept. 22 as China calmed global market fears over Evergrande.
China keeps up Evergrande cash injections
The mood remained buoyant among traders, but macro still provided mixed messages, while concerns focused on China and the coronavirus Delta variant.
Evergrande, the second-biggest Chinese property giant, remained earmarked for a default on hundreds of billions of dollars worth of debt. China’s central bank, the People’s Bank of China (PBoC), pumped another 120 billion yuan ($18.6 billion) into the banking system as a result.
This, in turn, soothed anxious markets, with the company’s potential collapse considered to be more a state-controlled “slow detonation” than a chaotic event with far-reaching consequences.
Nonetheless, the specter of China’s “Lehman Brothers moment” was set to be a market mover for the short term at least, analysts said.
“In the next few weeks and perhaps in the next couple of months, Evergrande coupled with FOMC, the delta variant and a host of other issues will continue to create great volatility and to some extent that volatility will be a buying opportunity,” Vasu Menon, executive director for investment strategy at Singapore’s OCBC Bank Wealth Management, told Bloomberg.
In Europe, shares of Evergrande jumped by nearly 25% in Frankfurt at the open.
All eyes on BTC’s weekly close
For Bitcoin, which had sold off in step with global stocks earlier in the week, the outlook was thus similarly choppy on shorter timeframes.
Trader and analyst Rekt Capital eyed the need for a weekly close above the 21-week exponential moving average (EMA) at just under $43,000.
“That would give us a lot of bullish momentum,” he said in his latest YouTube update.
Rescuing the 21EMA would also preserve a nearby demand zone and also paint the trip to $40,000 as a “fake breakdown,” filling buy orders before Bitcoin headed upward.
Fellow trader Pentoshi, meanwhile, highlighted a slightly lower level, $40,700, as the clincher for the weekly close.
“This location has a ton of historical importance and is crucial for this week’s close,” he tweeted.