Now You Know, Simply!

Q: What are Bitcoin and Ethereum?

A: Bitcoin and Ethereum are types of digital money called cryptocurrencies. People use them to buy things online or as an investment, hoping their value will go up over time.

Q: What Just Happened with Their Prices?

A: Recently, the prices of Bitcoin and Ethereum dropped suddenly. Bitcoin fell below $59,000, and Ethereum dropped below $2,500. This was a big deal because these drops happened really fast - over just one hour!

Q: Why Did This Happen?

A: No one is exactly sure why the prices dropped so quickly. Some experts think it might be because the market was "settling down," and this can sometimes lead to big changes in price. Others believe that September could be a tough month for cryptocurrencies.

Q: How did that affect crypto investors?

A: The price drop caused something called “liquidations.” This means people who were betting that the prices of Bitcoin and Ethereum would go up suddenly lost their bets, and over $170 million was lost in just one hour! Most of these losses came from people who had bet on Bitcoin and Ethereum.

Q: What's a Liquidation?

A: A liquidation happens when the value of an investment falls so much that the person who made the bet loses their money. In this case, people who thought Bitcoin and Ethereum would keep going up lost a lot of money when the prices went down instead.

Q: What About Other Cryptocurrencies?

A: Other digital coins like Solana, XRP, and Dogecoin also saw their prices drop. For example, Solana's price went down by more than 6% in just one day.

Q: What is the current state of China's property market?

A: China's property market is in a severe crisis. Despite government efforts to stabilize the sector, the situation continues to deteriorate. The market, which was thrown into chaos in 2021 following the default of real estate giant Evergrande Group, shows no signs of recovery, with property prices declining and the housing crisis intensifying.

Q: What measures has the Chinese government implemented to stabilize the property sector?

A: The Chinese government has introduced several measures, including reducing down-payment requirements, eliminating the floor of mortgage rates, and easing purchase restrictions. However, experts believe these efforts have not been sufficient to stabilize the market.

Q: Have these government measures been effective?

A: No, the measures have not been effective. Experts like David Lubin from Chatham House report that there has been no real improvement in the sector. Property prices in major cities have continued to decline, with the average property price across 70 cities dropping by 7.9% year-on-year in June, marking the largest annual decline on record.

Q: How has the housing market crisis evolved in recent months?

A: The crisis has worsened, particularly in both newly built and secondhand housing markets. According to Professor Kent Deng from the London School of Economics, prices in these markets have dropped by at least 40% over the past year, with further declines of 10-20% expected before any stabilization.

Q: Why has the Chinese government's plan to stabilize the housing market failed?

A: The government's attempts to stabilize the housing market have failed largely because legal measures to prevent price drops have not been effective. Many mortgage holders have defaulted, forcing banks to auction properties at significantly reduced prices, undermining the government's price control efforts.

Q: What is Beijing's broader strategy concerning the property market?

A: Beijing appears to be shifting its focus away from the property market as part of a broader economic strategy. The government aims to reduce the economy's reliance on real estate investments, diversifying into sectors such as semiconductors, AI, biopharma, green energy, and agricultural efficiency. This shift is partly driven by geopolitical concerns and the desire to increase economic self-reliance in the face of potential Western sanctions.

Q: What challenges does China face in implementing this economic shift?

A: China faces significant challenges, including high public debt, which limits the government's ability to inject fiscal stimulus into the economy. With public debt at 116% of GDP, the government is reluctant to loosen fiscal policy, which constrains its ability to purchase large amounts of property to stabilize the market.

Q: What might happen to China's economy if these issues persist?

A: If the current trends continue, China's economy may face even greater difficulties. The ongoing property market crisis, coupled with heavy reliance on exports, could lead to increased bankruptcies and higher rates of mortgage defaults. This scenario could result in a further economic downturn, with severe implications for both the domestic and global economy.