In an interview with a recent Squawk boxing show, Galaxy Digital CEO Mike Novogratz shared his views on why China’s Evergrande Real Estate Group’s liquidity crisis has uncomfortably deepened Bitcoin, Ethereum and the rest of the cryptocurrencies.

He also suggested an important price to watch for now for BTC and ETH holders.

“China attacks Bitcoin through Tether”

Yesterday, Bitcoin magazine reported that the slump in Bitcoin and other crypto markets was due to the liquidity crisis of the second largest real estate company in China – Evergrande Group – which holds nearly $ 2 trillion in debt from shareholders.

A batch of the company’s debt is due by the end of this week while the company does not have enough cash to make the necessary payments.

Novogratz said the reason this is affecting the crypto market is because many investors believe that much of Tether’s USDT supply will be covered by the securities of Chinese companies, and Evergrande in particular. USDT has done well in the past few days while BTC and other cryptocurrencies have collapsed.

USDT is the most popular stablecoin on the market and is widely used to buy and sell Bitcoin, ETH and other digital assets on exchanges.

“One of the biggest concerns in #Crypto was called the stablecoin #tether. Tether has done very well throughout this whole thing, but people get the idea that Tether has backed a lot of their stablecoins with Chinese trading papers, ”says @novogratz At #evergrande #btc pic.twitter.com/Wwb5wK3crP

– Squawk box (@SquawkCNBC) September 21, 2021

However, Chinese crypto journalist Colin Wu tweeted Monday that Tether had confirmed not holding any Evergrande-issued trading papers.

Observe key price levels

The Galaxy Digital CEO also spoke about the recent decline in the two largest cryptocurrencies in particular, believing that $ 40,000 for Bitcoin and $ 2,800 for Ethereum is very important right now.

As long as both can hold above these levels, the market is in good shape, he said.

At press time, Bitcoin is changing hands at $ 42,777 and Ethereum at $ 3,015, down 2.4% and 1.4%, respectively.

BTC USDT (left) and Eth USDT (right). Source: TradingView

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