Why Bitcoin, Cryptos Sank This Week

Bitcoin ( BTC -0.69% ), Dogecoin ( DOGE -3.25% ), and Chainlink’s ( LINK -9.14% ) tokens fell roughly 10%, 17%, and 18%, respectively, so it has been another tough week of selloffs for the broader cryptocurrency market.

In addition to concerns about cyclical pricing trends and regulatory risks, cryptocurrency prices seem to be getting dragged lower amid the ongoing China Evergrande Group debt default.

Investors have generally been showing signs of becoming more cautious amid a mounting combination of risk factors, and it is possible that the crypto space will see more significant sell-offs in the near future.

Fitch Ratings announced on Dec. 9 that China Evergrande Group had defaulted on $1.2 billion in bonds, and that it had responded by cutting the Chinese real estate giant’s rating to restricted default.

China Evergrande’s default status might seem like an odd catalyst to drive prices for Bitcoin and other cryptocurrencies lower, but it makes sense in the context of investors seemingly becoming more risk averse lately.

China stands as the world’s second-largest economy, and traders are worried that financial issues in the country could have drastic effects on other markets. Cryptocurrencies do not always post movements in line with trends for equities and assets, but broad movements out of risky investments can trigger big selloffs for crypto tokens.

With the market-leading cryptocurrency now down roughly 29% over the last month, this dynamic appears to be at least partially responsible for Bitcoin’s recent slide.