Global markets down, will turmoil in China trigger the next crypto-currency correction?

Massive protests have erupted in China and spread like wildfire amid the country’s strict COVID-19 restrictions. Last week’s events at Foxconn’s iPhone factory have triggered further reactions across the country.

On Monday, November 28, global markets came under pressure as investor anxiety increased. The effect is also visible in the crypto space, with the broader crypto market dropping 3% in the last 24 hours.

The world’s largest cryptocurrency, bitcoin, is down nearly 3 percent and is trading at $16,180. On the other hand, altcoins like Ethereum, BNB, XRP, Polygon, etc. are all down between 4% and 8%.

The recent unrest in China could exploit the vulnerability of crypto markets that have already been spooked by the collapse of the FTX crypto exchange this month. Over the past month, bitcoin and the broader crypto space have already fallen by 20%.

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Today’s drop in the crypto-currency market followed the correction in Asian stocks and U.S. stock futures. Speaking to Bloomberg, Katrina Ell, senior economist at Moody’s Analytics said, “One of the risks in China is that Beijing’s current Covid-zero mobility policy will be an obstacle to stabilizing domestic demand“.

Bitcoin is already down 20% this month in November. This is the worst monthly performance for the asset since June 2022. It is also the worst November on record for bitcoin so far. There are concerns that another major crash trigger could send bitcoin down to $5,000.

With China, fear is growing around the Wrapped Ether

Crypto-currency watchers around the world have also expressed concerns that Wrapped Ether is losing its link to the Ether token. The concerns stemmed from joke posts on Twitter that falsely claimed a break in the expected anchor between wETH and Ether.

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Markus Thielen, head of research and strategy at crypto-currency lender Matrixport, however, said they are “not too concerned” about wETH. Thielen said that Wrapped Ether is based on smart contracts. He added:

This will make it unlikely to be actually manipulated, as no one person, nor any centralized entity should be able to manipulate the open-source smart contract“, which can also be checked for bugs or flaws. Despite the current market crisis, Matrixport is looking to raise $100 million for a $1.5 billion valuation.

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