On Wednesday, September 22, bitcoin ended trading up. The BTC/USD pair rose 6.9% to $43543. Investors calmed down for a while about the Chinese giant Evergrande with debts over 300 billion. The price recovered from the level of $39600 to $443586, including today’s trading.
The price was falling amid risk aversion when news emerged that China Evergrande Group had not paid its debts at two banks. Rumors then surfaced that a deal could be announced within days. Evergrande would be transformed into three separate companies. Such a deal would allow the Chinese government to take control of the firms, with state-owned enterprises underlying the restructuring. Traders liked the rumors. They started buying stocks and risky assets again.
On Thursday during the Asian session, the dollar came under pressure. The head of Evergrande said the company would do anything to pay off investors and customers. The company’s shares were up 38% in the moment, to HK$3. At the end of the day, the price was up 18.6%, to 2.55. All the markets were buoyant.
At the end of the two-day meeting, the Fed left its federal funds interest rate range between 0.00% and 0.25%. Asset purchases remained at 120 billion a month. A reduction in volume has been expected since November. Fed policymakers believe the first rate hike will occur in 2022. The dollar index rose but almost lost it all today. The “buy expectations, sell facts” rule worked. The U.S. Fed decision was priced in.
There continues to be uncertainty on the exchanges regarding the Evergrande. See, first comes word that Chinese regulators are recommending that Evergrande avoid a short-term default on its dollar-denominated bonds. The company has been told to focus on completing unfinished construction projects and paying off individual investors.
Reuters runs the opposite: Chinese authorities are asking local authorities to prepare for the potential downfall of Chinese real estate giant Evergrande Group.
Bitcoin has corrected 50% of its fall from 48843 to 39600. The recovery will be a long one. If the external backdrop does not worsen because of Evergrande, a weaker dollar will open the way for buyers to the 47245 level. If they do not pass it, the price will roll down again. With the current price pattern, there is a risk to go back to the level of 42,000 again. The price was growing on lower volumes.