Digital currency has fell 5.7% in the past 24 hours and was trading at $ 42,955 per coin at 2:43 am ET on Tuesday, according to cryptocurrency tracker Coindesk.
Previously, it had fallen by 12%.
Other cryptocurrencies are also collapsing. Ethereum and dogecoin each fell 4.4% and around 6%, respectively, in the last 24 hours.
The drop followed a sharp drop in US stocks on Monday, as Wall Street fears turned to China. Investors have been worried about the worsening crisis in Evergrande, a huge Chinese real estate conglomerate that is at risk of defaulting.
This is the worst performance since May for the S&P (SPX) and the Nasdaq (COMP), while the Dow (UNDUE) recorded its worst day since July.
Experts have called Evergrande’s struggles a major test for Beijing, with some worrying whether the company risks creating the Lehman Brothers moment in China. While other analysts have said it is far from certain that the Evergrande crisis will become such a large-scale event, the crisis has sent shockwaves across the world.
The real estate company, struggling to manage its mountain of $ 300 billion in debt, was supposed to pay interest on some of its bank loans on Monday, according to Bloomberg. Evergrande did not respond to a request from CNN Business to comment on these payments.
Interest on two of its bonds worth more than $ 100 million is also due later this week, according to Refinitiv. Evergrande shares fell 5.7% in Hong Kong on Tuesday, extending Monday’s losses.
Even though the company mainly serves mainland China, investors around the world are worried. The huge amount of money borrowed by Chinese companies has long been seen as an imminent threat to market stability. Today, investors fear the banks’ exposure to Evergrande and similar companies.
US banks fell on Monday, with Goldman Sach (GS) and JP Morgan (JPM) among the worst performers of the Dow Jones.
The problem had already plagued Hong Kong markets earlier today, as Chinese banks, insurers and other real estate companies came under fire.
Edward Moya, senior market analyst for the Americas at Oanda, said on Monday that bitcoin was no different from other assets.
“The fallout from the Evergrande is a huge dent in the risk appetite that brings everything down,” he wrote in a note to clients.
Moya noted that cryptocurrencies have performed well this year, “despite all the volatility.”
“So this should come as no surprise to Wall Street, they are the first asset sold at the start of the China-induced market liquidation,” as investors aim to cash in, he added.
Others took the opportunity to double the bet. Nayib Bukele, the President of El Salvador who is known for his bullish stance on bitcoin, tweeted
Monday that “we just bought the dip.”
The country bought 150 bitcoins and now holds 700, he added.
Earlier this month, Bukele announced that El Salvador had become the first country in the world to adopt digital currency as legal tender.
— Anneken Tappe and Laura He contributed to this report.