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Bitcoin falls to nearly $40K amid fears of China debt crisis

Bitcoin, Ether and other cryptocurrencies have fallen over 10% in the last 24 hours.

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SOPA Images/Getty

Bitcoin's 2021 bull run ended in June when Chinese regulators cracked down on cryptocurrency miners. Bitcoin, Ether and almost all other cryptocurrencies experienced a sharp decline on Monday night, and it again appears tied to activity in China, though of a different kind this time.

Bitcoin's price has dropped over 11% in the past 24 hours, sitting at just over $41,600 at the time of writing. The cryptocurrency came close to falling below $40,000 when it dipped to $40,500 at 5:30 p.m. PT time. It would be the first time Bitcoin's price dropped below $40,000 since early August. Bitcoin's all-time high was $64,863, hit on April 14.

Ether, the second biggest cryptocurrency by market cap but the currency most used in crypto transactions, is down 12% in the last 24 hours. It at just over $2,900, the first time it's fell below $3,000 since Aug. 8. Dogecoin is sitting near 20 cents, down from its headline-making 70-cent high in May.

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Not a pretty chart for Bitcoin holders. 

coinmarketcap.com

Being a decentralized system, it's often hard to say precisely what causes the cryptocurrency markets to crash. Monday's price action is thought to be connected with China's property market and particularly the Chinese company Evergrande Group. Evergrande is the world's most indebted real-estate company, with over $300 billion in liabilities, and markets around the world have dipped out of fears that China will allow Evergrande to default on those debts.

The Dow Jones Industrial Average is down 1.78%, while Hong Kong's Hang Seng Index has dropped 3.38%.   

If Evergrande defaults, it could have dramatic effect on China's entire economy, which could in turn affect countries around the globe. The collapse of Evergrande has been likened to the Lehman Brothers bankruptcy that preceded the Global Financial Crisis, though its impact is unlikely to be as fierce. Evergrande's stock has fallen 85% in the past year, and its offices throughout China have seen protests from aggrieved employees, builders and homeowners.

It's been a tumultuous month for Bitcoin, which surged throughout late August and early September in anticipation of the cryptocurrency becoming legal tender in El Salvador, a world first. El Salvador's rollout of Bitcoin was beset by some technical issues, which seemingly spooked big investors and caused large selloffs

Chinese authorities caused cryptocurrency markets to plummet in June after officials made it clear that a 2013 ban on mining and other cryptocurrency-related services would be more strictly enforced. It's part of a larger crackdown on technology firms going on in China right now, which has seen authorities take aim at companies like Ant Group, Didi and ByteDance