Cryptocurrency prices were sliding Monday as China Evergrande Group's bond-payment problems rattled international markers.
Bitcoin, the world's largest cryptocurrency, fell 7.4% to $43,780 at last check, according to CoinDesk. Ethereum was down 9.4% to $3,034 and Dogecoin sank 11% to 21 cents.
Evergrande, China's second-largest property developer, has more than $310 billion in debt.
The company has held urgent talks with of its many creditors in hopes of delaying payment on two separate bond obligations due later this week.
Evergrande has been caught in a liquidity squeeze that could see it both fail to meet bond obligations and fall into bankruptcy proceedings. That in turn could trigger the forced sale of hundreds of commercial properties.
James Edwards, cryptocurrency specialist at Finder, said "bitcoin is like a very tightly coiled spring right now, but it's still unclear whether it will shoot forward or buckle under the pressure."
"Record amounts of bitcoin have been taken off exchanges, with levels being at their lowest point in the past 12 months," he said.
"Low liquidity typically leads to choppy price volatility, which can easily swing in either direction."
As for the macro outlook, Edwards said, "the reduction of bitcoin held on exchanges suggests that there is very little appetite for selling, with the market now focused on the next leg up before another wave of profit-taking."
"Unfortunately, the uncertainty surrounding Evergrande may spill out into cryptocurrency markets, which could see bitcoin retest support at $42,000 in the immediate future," he added.
On the regulatory front, Winston Ma, a former managing director and head of North America at China Investment Corp., said China seemed to be sticking to its original schedule to officially launch its digital currency (e-CNY) at the Beijing 2022 Winter Olympics."
"Since [the] People’s Bank of China issued its digital currency white paper in July, China has accelerated the testing of e-CNY," said Ma., author of "The Digital War - How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace."
Chinese media reported last week that a PBoC team visited Beijing 2022 Winter Olympics sites to further test e-CNY ATM and mobile payments, in what’s described by PBoC Vice Gov. Fan Yifei as the "final push,” Ma said.
He added that the West finds hard to grasp the idea that China is many years ahead of the US and Europe in developing sovereign digital currencies.
Ma said that China’s launch of e-CNY as government currency, together with El Salvador’s adoption of bitcoin as legal tender, "will become important reference cases for all nations stepping into digital assets," Ma said.
David Lesperance, managing partner of immigration and tax adviser with Lesperance & Associates, said U.S. regulators "have the bit between their teeth."
From IRS letters to individuals whose names have turned up from mixers like Helix; to “wash sale” rules; to the Securities and Exchange Commission bearing down on Tether to find out where it “invested,” Lesperance said, "the crypto world is feeling the inevitable heat from regulators."
"Whether exchanges, stablecoins, DeFi, miners, or owners of cryptocurrency," he said, "how these groups chose to deal with regulators and tax authorities will define which are still standing 18 months from now.”