Evergrande's Threat To Tether – Will Evergrande crash crypto?
The relationship between everyones major concern. Right now in china, evergrande a huge developer, thats well at risk of toppling over and everyones favorite stable coin tether. I mean what better combination could you have of trustworthy and reliable organizations guys really really so lets before we jump through this article lets jump over here and have a look im just gon na adjust this. We will jump over here and have a look at the crypto market we can see. Bitcoin is at 41 734 usd its going down, ethereum is going down, tether is at well when last time i checked that 99 cents or its meant to be locked at one dollar. So its a look at that volume, everyone, the circulating, supply and wheres the volume in the last 24 hours there you go, compare the volume of tether to everything else. You can see how important it is to the crypto uh, crypto trading so and cardanos down everythings down. Everything is down just like the rest of the markets. Its almost like crypto is now just a correlated asset, its not non correlated its just linked to everything else. It follows apollos stock exchange. There you go so evergrande and chinas looming risk to tether. So this is an opinion piece by david zed morris from coindesk taylor says it doesnt hold short term debt from the struggling developer, but that doesnt mean tether holders arent at risk. The stablecoin issuer tether this week declared that it doesnt halt short term debt issued by troubled chinese real estate developer evergrant.
Since tether doesnt disclose specifics about the commercial paper that substantially back its stable coin, you think they would. They really are like theyre worse than the reserve bank of crypto arent. They they really are worse uh. This is a bit like serving a house guest with a sandwich and loudly assuring them that its absolutely not made from diseased horsebeat. It seems increasingly likely that evergrande is fated instead for the glue factory, but it could still take tether with it, depending on whats, actually in the stable coin sandwich. So, though, its main product, since, in fact, since its founding in the 1990s, has been housing evergrant, has grown into a huge conglomerate with products ranging from bottled water to electric cars to a soccer team. Okay, it sounds like theres a whole lot of other rubbish that they dont need to its expanded by borrowing aggressively, including during periods when chinas economic outlook was seen in a much rosary rosier terms globally than it is now. Evergrant has failed to execute on the promises backing its roughly 300 billion in debt, particularly in housing. Now heres, the thing weve got to see how much of that debt is actually in usd or in local currency. My understanding is the majority of it is in the local currency, among other signs of serious mismanagement. Customers have made large deposits on ever grant apartments that were never built buying off the plan. Hundreds of customers have protested in front of the companys offices, alleging mistreatment or fraud, but this is not just about one company.
Even if tether doesnt specifically hold any of evergrounds short term debt, it could have huge exposure in the form of other chinese obligations. The developers debt is spreading, acro spread across an army of banks and other financial institutions leading some analysts to worry that its collapse would have systematic impacts comparable to the fall of lehman brothers, which kicked off the great recession 13 years ago. Debate swirls about whether the impact would spread beyond china, but theres broad agreement that impact within the country would be near. Catastrophic. Evergrant is just the latest major chinese firm to have serious problems due to apparent fraud or mismanagement, see not just capitalist societies. The communists have it too. A wave of smaller stock frauds from 2010 to 2016 were chronicled in the documentary. The china hustle and luck and coffee put an exclamation point on the trend in 2019.. Ah, remember that one remember that one, the types of heavy handed control that type of every handed control is the core of chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. These frauds even show some signs of being tacitly approved by the chinese government to the extent that they have targeted investors abroad. Its been going on for a long time on analyst, who warned about ever grants practices as early as 2012 was temporarily banned from hong kong markets by regulators for his reckless claims, and my understanding is theyre allowed back in hong kong.
Soon, the 10 year ban, zilli up chinas, loose and reactive at best financial regulatory environment is one reason anxiety around tether has largely centered on whether it all china it holds chinese commercial paper in general, not just whether it holds evergrants over the past two years. Yet another headwind has entered the china mix after a couple of decades of relative freedom for entrepreneurs, including, as mentioned the apparent freedom to commit securities fraud. Chinese leadership under xi. Jinping has begun to aggressively intervene in markets. This has included harshly curtailing, apparently successful. Fintech firms like and group, and most recently instituting restrictions on video games, which cant be good for tencent and other firms. That type of heady handed control is the core of chinas conundrum, as an authoritarian state trying to reap the rewards of capitalism markets. Cant function without transparent information flows, full stop, thats pricing, everyone thats. What pricing is we dont? Do we have that in our markets, not entirely theres certain we see this is when you think when people argue for free market, we dont actually have it. The systematic suppression that characterizes chinese markets adds an opaque but potentially huge risk for the holders of any chinese assets, even if that risk is wrapped up in a supposed stable coin. So there we go. So what do you think everyone more fear or concern about about? Uh well, the relationship between china, evergrande and tether well have to see everyone lets lets have a bit of a talk about this Music.
Well, i this could be another risk. Tether is well its an interesting case. I mean, do you trust, tether, theyre, not foreclosing? All of the paper that they have how much of it could be exposed to china if they topple over, is it going to be an issue now will ever grant you know the collapse of that organization? Will it be allowed to happen and will have flow on effects to the other parts of the world? I think here in australia it most certainly might have an impact on us if it has an impact in china. Itll have an impact on the australian economy. Itll have an impact on the australian dollar as well, which could make us more attractive, our exports more attractive to competitive markets. So it could be a win win in the long term, but going back to tether well, even without this evergreen stuff. Tethering itself is a huge bloody risk. Do you trust them so guys there we have it. Let me know your thoughts and opinions on that one because well i certainly dont trust any of them, but also some you got ta remember a lot of doom and fear around. This could be overblown well have to wait and see, as always, if youre a fan of the channel and enjoy the content i create here, there are a few ways you can support us. You can join us on youtube or patreon sign up for self wealth or stake use.
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