China messing with the markets again, Beijing bail out for Evergrande or Nah? Bullish and Bearish Scenarios for Bitcoin and Ethereum
- Evergrande Crisis – More China FUD?
Evergrande Crisis – Beijing Bail Out? or Nah?
On Monday September 20th, 2021, fears of China’s second largest real estate company (Evergrande) not being able to pay off its debt obligations sent a shockwave throughout the market. Evergrande reportedly owes money to around 171 domestic banks and 121 other financial firms and is on the brink of default due to a cash crunch. The fear was visible in Monday’s stock market session, and this carried over to the crypto market as well. Traders and investors were worried that Evergrande’s failure to pay off its debt would set off a chain reaction i.e., suppliers going broke, commodity prices collapsing, and the value of Chinese housing tanking.
One possible solution is that Beijing could intervene and bail out Evergrande. China created and enforced new rules last year to try to force property companies to get their debts under control. Is Evergrande too big to fail? Would Beijing bailing the property company out teach other Chinese business owners the wrong lesson about running a debt heavy business? I guess we will have to wait and see how this Evergrande situation plays out.
BTC Daily Chart
BTC Weekly Chart
On the Daily timeframe, Bitcoin/USD is sitting right above the range high ($42K). This is a key area because price spent 10 weeks consolidating in this range throughout the summer before it broke out. In my opinion, I believe that the area of $42k down to $38K is the last level of defense for bulls. That area is an extremely critical area of support that needs to hold up if bulls want to see new ATH’s during this current bull run.
Bitcoin Bull Scenario
Bitcoin stays above the $38k – $42k area on a weekly closing basis and attempts to reclaim the $44k level again.
Bitcoin Bear Scenario
A weekly close below the $42k area and I would be very concerned. The absolute last level of defense would be $38K in my opinion. It is very important that this area holds up for Bitcoin/USD to remain bullish.
ETH Daily Chart
ETH Weekly Chart
It seemed that Ethereum/USD wanted to create new all-time highs so bad, but Bitcoin had other plans for the altcoin. At the time of writing, Ethereum is down about 26% in the past 3 weeks. The area of $2.9k has acted as daily support but the must hold area of support is $2.7k.
Ethereum Bull Scenario
Ethereum stays above the $2.9k area on a daily closing basis and attempts to reclaim the $3.1k level again.
Ethereum Bear Scenario
A daily close below the $2.9k area and I would be very concerned. The absolute last level of defense would be $2.7K in my opinion. It is very important that this area holds up for ETH/USD to remain bullish. I personally believe that Ethereum will only be bullish if Bitcoin is bullish, so for now we will have to keep our eyes on Bitcoin.