Bitcoin Drops as Tremors From China Unrest Spook Global Markets

Joanna Ossinger and Muyao Shen
·2 min read
13
Bitcoin Drops as Tremors From China Unrest Spook Global Markets

(Bloomberg) -- Cryptocurrencies slid Monday as BlockFi Inc. filed for bankruptcy, the latest crypto firm to collapse in the wake of crypto exchange FTX’s rapid downfall.

Most Read from Bloomberg

Prices had slumped earlier amid a bout of investor anxiety in global markets sparked by protests in China against Covid restrictions.

Bitcoin, the largest token, at one point shed 3.2% and was trading at about $16,090 as of 11:04 a.m. in New York. Second-ranked Ether fell about 5%, while the likes of Solana, Avalanche and Dogecoin suffered even sharper losses.

BlockFi said in a statement that it will use the Chapter 11 process to “focus on recovering all obligations owed to BlockFi by its counterparties, including FTX and associated corporate entities,” adding that recoveries are likely to be delayed by FTX’s own bankruptcy. Chapter 11 bankruptcy allows a company to continue operating while working out a plan to repay creditors.

Crypto markets have been on edge over the contagion spreading from the fall of Sam Bankman-Fried’s FTX exchange and sister trading house Alameda Research.

Read more: China Covid Unrest Boils Over as Citizens Defy Lockdown Efforts

The drop in crypto assets Monday came amid a slide in Asian and US stocks. One risk in China is that Beijing’s ongoing policy of Covid-zero mobility curbs is an impediment to stabilizing domestic demand, Katrina Ell, senior economist at Moody’s Analytics Inc., said on Bloomberg Television.

Bitcoin’s Bad Month

Markets may also be fretting that unrest in China will cause further supply chain constraints globally, said Hayden Hughes, chief executive officer of social-trading platform Alpha Impact. Such snarls can make it harder to beat back inflation, leaving interest rates higher.

Bitcoin is down about 21% so far in November, the token’s worst monthly performance since June. This year’s crypto rout has sliced almost 70% off a gauge of the top 100 digital assets.

The collapse of FTX -- which once boasted a $32 billion valuation but tumbled into a bankruptcy in a matter of days this month -- continues to threaten a wider reckoning for the digital-asset sector.

Read more: FTX Tensions Intensify as Bahamas Blasts Firm’s New Chief Ray

“Elevated contagion risk is being profiled into the cryptocurrency complex,” said John Toro, head of trading at digital-asset exchange Independent Reserve.

For crypto market prices: CRYP; for top crypto news: TOP CRYPTO.

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.