Conflicting news about whether Chinese property giant Evergrande had defaulted on its overdue loan payments emerged just before Bitcoin’s (BTC) recent price crash.

Evergrande Group is China’s second-largest property developer and is in debt for roughly $300 billion. There are fears that its collapse could spark a wider financial crisis.

Two minutes after Evergrande’s payment was due, the Deutsche Markt Screening Agentur issued an announcement on Wednesday at 4 pm UTC, stating that it was preparing bankruptcy proceedings against Evergrande.

Two hours later, at about 6 pm UTC, Bitcoin began it’s hours-long pullback to $62,800.

Media outlet Morning Brew reported about 45 minutes later that Evergrande had missed a payment on its outstanding debt, which was due on Wednesday at 4 pm UTC, and defaulted. Another 45 minutes passed before Bloomberg issued a story saying that it hadn’t.

Prices stabilized around $64,500 several hours after the initial drop. This was around the same time Bloomberg reporter Allison McNeely tweeted, “Contrary to what you may have heard ~on the internet~ Evergrande did not default today.”

William Fong, senior trader at Australian crypto-asset investment platform Zerocap, told Cointelegraph:

“Evergrande has not officially defaulted on any of its offshore debt obligations in the international USD bond market.” 

“Bottom-line, $148 million is nothing compared to the $300-billion outstanding debt of Evergrande, but it does create a concern for the $100-billion outstanding ‘keep-well’ structured offshore bonds by Chinese SoEs [state-owned enterprises] and corporates,” he stated.

Fong believes that a bailout for Evergrande will not come any time soon because “Chinese regulators were the initiators of a cap aimed at over-expansion in developer’s leverage,” adding:

“This has created potential contagion risk across the entire property developer space and has expanded towards financial institutions and industries dependent on the sector as well.”

Some believe Bitcoin’s price could also be at risk from a stock market meltdown and due to fears that nearly half of Tether’s reserves are made up of commercial paper, amounting to nearly $30 billion. This is enough for the Financial Times to place Tether among “global giants” in that category. 

Related: Record-high inflation prompts investors to take a closer look at Bitcoin

However, Tether has denied that it holds any commercial paper from Evergrande, though it may be exposed to Chinese companies. Commercial paper is a corporate debt note with a short expiration date of usually under a year.



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