Should Chinese Investors Buy Bitcoin Amid Real Estate Bubble Burst?

YEREVAN ( — After an 18-month-long hearing, a Hong Kong court has sealed the faith of Evergrande, one of the giants in China’s property market. According to the court’s recent ruling, the company must liquidate, potentially ending speculations about the company’s future. The development and the economic repercussions that will follow the real estate bubble burst present a perfect case of why investors should buy Bitcoin (BTC).

Is Evergrande Finally Dead?

Once one of the largest property developers in the world, Evergrande now holds another title to its name. It is the world’s largest indebted development company. 

According to reports, the firm’s liabilities exceed the $300 billion mark. Although the firm tried for months to convince the court that it could recover from this, its attempts have failed to make an impact. 

Delivering the verdict on Jan. 29, Justice Linda Chan seemed to have had enough. “It is time for the court to say enough is enough,” she said, according to media reports. 

According to Professor Shirley Ze Yu, a leading voice on China’s political economy, this development was on the cards. In a recent interview with the BBC, Yu, a member of the Davos Expert Network in China, argued that Evergrande’s “liquidation event should be neither surprising nor catastrophic.”

In her statement, Professor Yu argued that the company has a debt level of $330 billion with an asset size of only $240 billion. Despite not having enough assets to pay off its debtors, the company has run on a net operating loss from quarter to quarter. This shows that Evergrande is no longer financially viable and has failed to prioritize correcting its balance sheet. 

“Over the past couple of years since Evergrande defaulted on the very first dollar debt two years ago the company has resorted to at the board level to favor the equity holders, the share holders, over the debt holders. The biggest beneficiary of this policy was its founder Hui Ka Yan and his former wife,” 

she said during the interview. 

Professor Shirley Ze Yu’s interview with the BBC regarding the recent verdict on Evergrande

However, Evergrande is not the only industry giant on the verge of collapse. Country Garden, another property titan, also teeters on a similar edge. In October 2023, it defaulted on debts, forcing it to sell a small stake in a Dalian Wanda unit back to the Dalian Wanda Group for $428 million. Despite this, its future remains unclear. 

Should Chinese Investors Buy Bitcoin?

These developments surrounding Evergrande and Country Garden hint at a looming crisis in China’s real estate sector, threatening widespread economic tremors.

Their spillovers, which include unemployment and financial instability, could be disastrous for China. 

Amid the growing uncertainty, here’s why Chinese investors should buy Bitcoin instead.

Bitcoin offers diversification and decentralization

With real estate, otherwise traditionally considered a stable asset, wavering, other alternatives become viable. In this sense, BTC helps diversify investment portfolios to reduce overall risk. 

The massive returns offered by Bitcoin, especially during the bull market, come as a huge respite for investors. In times of economic uncertainty, Bitcoin price has often surged, acting as a hedge for those with a diverse portfolio.  

Moreover, unlike real estate, Bitcoin thrives on decentralization. Its value is neither tied to a single economy’s health nor is it dependent on a handful of people. 

While Evergrande gathered debt, the firm continued to look out for the interest of its shareholders. However, Bitcoin’s decentralization offers a buffer against the current crisis and is not controlled by a single entity. 

Chinese investors shouldn’t limit themselves to borders

While the Chinese real estate market is confined to its borders and national troubles, Bitcoin operates globally. It is not bound by national economic policies or actions of a single bank of Government, nor is it affected by sector-specific downturns. 

This global access offered by BTC ensures that investors can tap into broader market dynamics. This not only helps them sidestep localized crises but offers them to earn larger returns. 

Investors should buy Bitcoin as an inflation hedge

While the real estate bubble burst in China is a major problem, economic instability in countries often comes with inflation. Bitcoin, the largest crypto in by market cap, has a maximum supply of 21 million coins. It offers a hedge against the devaluation of fiat currencies.

Over the years, the Chinese Yuan has lost extensively against Bitcoin. With Beijing facing fresh currency devaluation and foreign firms withdrawing capital from the country, Bitcoin offers an alternative to citizens. 

Chinese Investors should Buy Bitcoin Amid Real Estate Bubble Burst in the country caused by Evergrande and Country Garden. BTC price up.
5-year graph showing the Chinese Yuan declining against Bitcoin (BTC). Source: Google Finance

Moreover, with the global economy pivoting towards cryptocurrencies, buying Bitcoin will help investors stay at the forefront of new technological advancements. 

Bitcoin ETF Coming to China 

In a recent development, Harvest Hong Kong — one of China’s largest fund managers- has applied for a license to offer the country’s Bitcoin exchange-traded fund (ETF). 

The application to the Hong Kong Securities and Futures Commission (SFC) comes weeks after the US Securities and Exchange Commission approved the first spot BTC ETF in the United States.

Chinese Investors should Buy Bitcoin Amid Real Estate Bubble Burst in the country caused by Evergrande and Country Garden. BTC price up.
Eugene Ng’s tweet about the first Bitcoin ETF application in China. Source: X

Approval from China could see BTC price surge further, increasing its against the Yuan. Given the exciting development, investors should buy Bitcoin in order not to miss the opportunity. 

As the real estate bubble in China bursts, led by Evergrande and Country Garden, Bitcoin emerges as a viable, attractive investment alternative.

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