Earlier today Coinbase announced that it not only was postponing its Lend Program which would have allowed USDC holders to earn interest up to 4% but that the project was being shelved. From how it looks the SEC might have gotten a little bit upset at Coinbase CEO for going after the SEC for the lack of regulatory clarity on what they were trying to do. This is a rather disappointing thing as it is the government standing in the way of innovation and the ability for new wealth to be generated.
Another thing people have pointed out today is the inflation fears related to the huge spending bills that the Democratic Majority is trying to pass in the US. This week also has a huge meeting with the Federal Reserve and if these two prior reasons were not enough there is one more treat… The Republican Minirity has let it be known that they will not support attaching the debt ceiling to the spending bill and are willing to let the US Government to default. This has never happened before however this negotiation tactic has been used before so it will be interesting to see if it will happen.
If it was not one of these events mentioned before what could it possibly be? Well…. China. Once more China is causing chaos in the markets across the world. What it boils down to is one of China’s largest property developers, Evergrande Group, is $300 BILLION in debt and has been sounding the alarm it is unable to meet upcoming obligations. This is the China equivalent to the Lehman Brothers crisis. The impact of this companies impending collapse cannot be understated. Protests have occurred outside their offices across the nation as regular citizens are wanting their investment back. This company going belly up impacts everyday Chinese investors and Chinese companies who tend to hold quite a bit of the debt. This company has also been one that was used for exposure to the Chinese market.
China though odds are will be able to absorb this as since the government could easily absorb the company or Nationalize it. While people would not be made whole and international bond holders will probably be really burned by this there is a solution to provide some sort of solution and relief.
The reason I argue that this is leading to the crypto market crash is crypto is concerned a risky asset. China as a developing nation and one known to be a risky investment having a meltdown like they currently are leads to all risky assets to be reviewed and people to try and move to more conservative investments or even cash. A combination of all of these events led to a spectacular pullback in the US stock market as well as the crypto one. How long this will last for I haven’t a clue as a lot is going on.
I implore anyone looking to invest in the markets right to do your own research. I am not a financial advisor and these are only my opinions of what is going on right now.